BANGALORE, India - Citigroup Inc. said India needs to ease regulations on foreign ownership of banks before the company makes acquisitions there.
A 49% limit on foreign ownership and a 10% cap on voting rights in local lenders discourage acquisitions, said Sanjay Nayar, the chief executive of the Indian unit of Citibank NA.
"We will always be looking at things," Mr. Nayar said. Still, he said, because of the regulatory limits any plan would "probably be a nonstarter."
Last year India raised the limit on foreign ownership of nonstate lenders to 49% from 20% to help attract capital, technology, and financial expertise.
In the only transaction prompted by the move, the Dutch financial services giant ING Group NV paid $78.5 million to raise its stake in Vysya Bank Ltd. to 44% from 20%.
ING is not the only foreign banking company challenging Citibank's position.
Standard Chartered PLC overtook Citi as the largest international bank in India when it bought the Indian unit of Australia and New Zealand Banking Group Ltd. in 2000. The U.K. lender's assets in India total $6.1 billion, versus Citibank's $4.9 billion.
Standard Chartered has 60 branches in the country, three times as many as Citi.
Citibank is making progress in one activity: credit cards. "If you are looking at the size of the operation, you shouldn't just look at the balance sheet," said Sarvesh Sarup, the head of consumer banking at Citibank India.
Citibank has 1.6 million credit card customers in India, as many as 250,000 more than Standard Chartered, Mr. Sarup said. It is also the leading card issuer, he said, with a 38% market share for usage.
The bank has two million customers in the nation of more than one billion, including 900 corporate clients and 3,000 small and midsize businesses, and $1.7 billion of deposits from expatriate Indians.
Today Citibank begins operating as a primary dealer in fixed-income securities in India, which will allow it to trade directly with the central bank.
"Our areas of focus will be commodity derivatives, foreign exchange, and helping our corporate clients manage risk," Mr. Nayar said.
