We reported on Wednesday how Citigroup Inc. was
selling its India-based back-office captive outsourcing unit to Tata Consultancy Services for $505 million in cash. The U.S. bank also awarded Tata a $2.5 billion, nine-year outsourcing contract to handle
application development, infrastructure support, help desk and other process-outsourcing services.
Now, India's Business Standard is reporting that Citigroup, which is in a heated battled with Wells Fargo & Co. for the assets of Wachovia Corp., is forming a 50/50 joint venture with Reliance Retail to sell financial services, including loans and credit cards, in India. The deal has not been formally announced, but the paper quotes an unidentified Citi executive as saying Reliance is already selling Citi products. Reliance has about 1,000 retail outlets in India and about 4 million customers.
The move comes amid reports that Indian banks are becoming more cautious in their lending and issuance of credit cards as customer default rates rise. According to the Rupee Times, growth of the credit card industry is expected to drop by about 20% this year. Interestingly, in its 2008 Citigroup Vulnerability Index, the bank ranked India as one the economies most vulnerable to the world financial crisis. - Suzanne Stevens
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