In Feb 2023, Axis Bank completed the acquisition of the consumer business of Citibank India and its non-banking finance arm, Citicorp Finance (India). Get all the details of this development in this article. This is an important topic for the IAS Exam Indian Economy segment.
Axis Bank acquired Citibank’s Business
- The deal was completed fast: within 7 months of getting the approval of the Competition Commission of India.
- This transaction includes loans, credit cards, wealth management and retail banking operations of Citibank India.
- Post transaction the capital adequacy ratio of Axis Bank will be 17.62% while the Common Equity Tier 1 (CET1) ratio will be 13.78%, and this is well above the regulatory requirement.
- Citibank India will remain focused on serving its institutional clients in India and globally.
Additional Information:
- Axis Bank is the 3rd largest private sector lender in India.
- CET1 capital:
- BASEL 3 norms require banks to maintain a minimum capital adequacy ratio of 8% of their risk-weighted assets (In India it is 9%).
- The Capital Adequacy ratio is the ratio between a bank’s total capital and its Risk-Weighted Assets (RWAs).
- The capital of a bank is divided into Tier 1 and Tier 2 capitals. Tier 1 capital refers to a bank’s Common Equity Tier 1 capital and Additional Tier 1 capital. RBI mandates that Tier 1 capital must be at least 7% of RWAs on an ongoing basis.
Competition Commission of India Act
- The Competition Commission Act was introduced by replacing the earlier existing Monopolies and Restrictive Trade Practices (MRTPS) Act, 1969.
- It established the Competition Commission of India for the implementation of various provisions of this act and it follows the philosophy of modern competition laws.
- It prohibits anti-competitive agreements, and abuse of dominant position by enterprises, and regulates combinations (mergers, amalgamations and acquisitions) with a view to ensuring that there is no adverse effect on competition in India. Transfer pricing is not related to the Competition Commission of India.
Axis Bank acquired Citibank’s Business:- Download PDF Here
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