As some of you might have already read, Citigroup hit a major issue in India recently. Indian Banking market is dominated by HDFC, ICICI and SBI. All other players came in later and still in their process of wooing consumers but to a great extent, it is yet to break the jinx in the minds of middle class Indians. Citi has tried hard to break into the minds of young people and it has been successful to a some extent. So, the news of more than $67mn fraud is going to disturb its run, hitting hard on the brand name and the image of the Citigroup badly in India.
Relationships Manager of Gurgaon Citi branch, Shivraj Puri, has been named as the prime suspect and the fraud amount is said to be anywhere between $67 mn – $89 mn. One of the investors, Sanjeev Agarwal, who invested in the in the alleged fraud fund, went on to file a police complaint. All the top executives of Citigroup were named in the police complaint including CEO Vikram Pandit, Senior Vice Chairman William Rhodes, COO Douglas Peterson, CFO John Gerspach and many more.
SEBI, the regulatory board has already issues showcase notices to the Citigroup in India and has started looking into the fiasco. But what does it mean for Citigroup globally and specifically, in India? Citigroup’s credibility was in question during the Financial meltdown and has been heavily criticized for its irresponsible behavior. It received one of the largest chunks in the Bailout and if I am not wrong, US government owns a significant stake in the company till now. It is unfortunate for Citigroup to get involved in scams and definitely the timing of this fraud is an unfortunate one.
WSJ, Reuters and everyone covered the news of this fraud. So, I feel that Citigroup would have to now answer some serious “responsibility” related questions. It has to look within – its management, its transparency and other factors. I am often told that as the company grows, it is very difficult to break the norms and try to do things differently, even though they might be beneficial. Sometimes the reason is the way company operates and sometimes the reason are the power-hungry insecure managers. I am not sure what is wrong with Citigroup but I feel there might be something within. Processes need to be more transparent to the investors and consumers. I feel that Banks must not forget that they exist for one reason: they assure their customers safe returns on their money and this is primary reason for which banks started existing.
On a final note, I would love to see a more responsible Citigroup than the one in its current state. Would Citi be able to come out of these kind of major crisis situations? Would Citi be able to establish the same faith in our minds back? Would Citi be able to reinstate its position as Numero Uno? Only time would tell.