May 15 (Bloomberg) -- Citigroup Inc., the largest U.S. bank by assets, raised $500 million to invest in roads, ports and utilities in India, the world's second-fastest growing economy.

Citigroup agreed to start a $5 billion Indian infrastructure fund with Blackstone Group LP and two Indian finance companies in February 2007. The fund-raising is the first phase, Sanjay Nayar, chief executive officer of the bank's Indian unit, told reporters in Mumbai today.

Citigroup and Blackstone aim to tap the $1 trillion Asia's third-largest economy proposes spending on roads, railways and airports within the next 10 years.

The New York-based bank has no plans to shut or sell its consumer finance division in India, Nayar told reporters. The unit fired 400 employees and is seeking to sell almost $1 billion from its loan portfolio, the Economic Times newspaper reported on May 2.

``We are not exiting,'' Nayar said, without elaborating. ``We are changing segments a little bit.''

Citigroup operates 39 branches in 27 cities in India.

To contact the reporter on this story: M.C. Govardhana Rangan in Mumbai at grangan@bloomberg.net.

Last Updated: May 15, 2008 04:16 EDT