The new financial year has begun. There are some changes to the income tax rules, the important one being, the tax of 30% on crypto gains. The Aadhaar-PAN linking deadline has been extended by the Govt, but there is a penalty to be paid now.
This week Axis announced that they would be taking over some parts of the business of Citibank in a $1.6 billion deal. Let’s explore more about that in our Top-Bite section. Hop on to know more!
Top Bite this week
Axis acquires Citibank’s retail business. How does it affect you?
What’s going on here?
Last year Citibank announced that they would be selling their consumer business in India and 13 other countries as a part of their global plan to focus on certain areas like the US, Singapore, UAE, and London.
There was a bidding process, post which Axis won the deal to acquire Citibank’s retail business in India. This includes their credit card, consumer retail accounts, loans, and wealth management.
Why did Axis acquire Citibank’s retail business?
Citibank has been in retail operations in India since 1985 and was one of the premier foreign banks to operate in India. They have 30 lakh, unique customers, with 1.2 billion accounts and 3000 corporate clients.
Their credit card portfolio boasts of High Networth individuals with average spends that are 1.4times more than the industry average. In addition, they have healthy deposits and an equally attractive portfolio of loans which made it very attractive for Axis to acquire the business.
What’s the impact on Citibank’s existing customers and employees?
Axis Bank is looking to retain 21 of the branches in prime locations along with most of the 3600 employees.
Existing customers will get an option to move their accounts, cards, or loans to Axis Bank with the same awards, privileges, and offers. All Citibank customers will have to give this option after all regulatory approvals are in place for the deal. It is estimated that the deal will take around 9-12 months to complete.
Once the deal is complete, the existing Citibank customers could also benefit from the wide geographical spread of Axis’s branches and other services offered to Axis’s customers.
You Ask We Answer
How does an equal-weighted index fund differ from the normal index funds? – Kamal Kumar Ghosh
Equal weighted Index funds are a recent introduction. Usually, indices are built on the basis of market capitalisation which is why the index is also called a free-float index. Here the market capitalisation of a stock determines its composition in the index. Market Cap in turn, is determined by the face value and the number of shares in the markets.
For Ex : For a normal index fund, If Reliance Industries has a weight of 15% in the index, the fund will also allocate 15% of their assets to buy Reliance.
But, in the case of an equal-weighted index, all the index stocks occupy a similar weight. If the index has 50 stocks, all of them will be allocated the same amount. This strategy reduces the bias of the possibility of large-cap stocks affecting the performance of the index.
Quiz Bite
Which of the following carries the highest rate of interest?
- a)Credit Card outstanding balance
- b) Personal Loan
- c) Home Loan
(The answer is a. credit card outstanding balance. Interest on credit card outstanding balance is the highest often ranging from 36-48%)
