Citi Private Bank has an almost unrivalled capacity to serve a fast-growing and important segment of the world’s wealth management industry – non-resident Indians – one of the US private bank’s senior executives argues.

Citi Private Bank has an almost unrivalled capacity to serve a fast-growing and important segment of the world’s wealth management industry – non-resident Indians – one of the US private bank’s senior executives argued recently.

In the alphabet soup of acronyms that infest financial news, one that comes up with increasing frequency is NRI, a term describing people of Indian origin or citizenship living outside the home country. It is testimony to increased globalisation and the wealth of the Indian sub-continent that this segment is now getting such prominence. 

“From a macro perspective, it [the NRI community] is an important community globally. It has multi-locational, multi-currency requirements. We want to support these needs through an all encompassing, seamless 'One Citi' service, which combines the on and offshore private bank with our NRI services, as well as the corporate and investment bank,” David Poole, head of Citi Private Bank, told WealthBriefing in an interview.

He pointed out that, according to The Sunday Times Rich List, some of the eight largest Asian families living in the UK have wealth of at least £500 million (around $778 million) each, with a long tail of others of significant sums of money. Lakshmi Mittal, the steel tycoon, and his family together are worth £22.45 billion, the list said (published in May this year); in second place is Anil Agarwal, who makes money in the mining industry, at £4.1 billion.

So it is hardly surprising that Citi Private Bank, which caters to ultra high net worth clients, regards the NRI market as an important segment. And other banks have been busy in this area, such as Royal Bank of Scotland via its wealth arm, Standard Chartered, Credit Suisse and Barclays Wealth.

Citi recently added Vaibhav Sharma, formerly of Standard Chartered, as a director in its UHNW team. He was appointed to help contributing to the firm’s UNHW global NRI business.

Given the traditional family-based ownership structures of many Indian businesses, an obvious approach for banks to take is in advising such clients on the possibility - assuming the economics works - of creating a family office. This is an area that Citi has looked at, bringing in assistance from third party consultants, Poole said.

The prospects for India's HNW market remain strong. According to the latest Merrill Lynch/Capgemini World Wealth Report, the HNWI population in India rose by almost 51 per cent last year. Growth rates remain robust, although this area is not immune to broader economic problems.

The NRI status, in its modern form, dates back to the Indian Income Tax Act, 1961, points out Pallavi J Bakhru, partner at Walker Chandiok & Co. There are three broad categories of person as affected by this act: resident but not ordinarily resident (RNOR); resident and ordinarily resident (ROR) and non-resident (NR). The latter category embraces the non-resident Indian bracket, defined as “an individual, being a citizen of India or a person of Indian origin who is not a resident”.

"There is no single definition of an NRI that applies to all statutes and in all situations.  Generally speaking, legislations which are relevant for NRIs have a definition of the term within the legislation. In certain situations, there is a specific definition of NRIs for a particular set of regulations / rules within a statute, resulting in multiple definitions of the term within the same statute," Bakhru told this publication.

Assuming that an Indian Citizen is non-resident (as per the definition under the ITA), such individual will not be required to file a return of income unless he or she has taxable income in India, Bakhru explained.

UK market

In the UK, such potential clients are represented not just in London but across the UK in places such as Manchester and Birmingham, Poole said. They have a strong presence in sectors such as international trading, retail, foods and consumer goods, and many of them have suppliers and properties around the world, he added.

Given their geographic spread of interests and assets, the management of currency exposure is a key service Citi can provide, he said.

“They have a much more cosmopolitan foreign exchange situation and therefore more risks. These families want us to be in tune with them and they expect us to know about trades in currencies; to know about business in India and Asia,” Poole said.

The firm points out that it has 75 trading floors around the world with a forex facility; it deals in more than 100 currencies and provides banking facilities to 140 countries.

With a reach such as that, Citi is well placed to deliver a service that such a cosmopolitan client base will demand. With so many other banks looking to grab market share here, Citi, like its peers, cannot afford to deliver less than the very best.