Citigroup said it sold its stake in India's Housing Development Finance Corp for $1.9 billion, as the bank steps up efforts to strengthen its capital base.

Citi said on Friday it would likely record an after-tax gain of about $722 million from the sale of its 9.9 percent holding in India's biggest mortgage lender.

The share sale, the largest in India this year, follows the sale of stakes in other Indian financial firms by international investors including US private equity firm Carlyle and Singapore state investor Temasek in recent weeks.

The sales have coincided with a sharp rise in the share prices of Indian financial companies, which would be among the main beneficiaries of expected interest rate cuts by the Reserve Bank of India later in the year. India's stock market has risen about 16 percent so far this year.

The sale of the HDFC stake is "ongoing capital planning efforts," Citi said in a statement. The bank sold 145.3 million HDFC shares at 657.56 rupees each.

The price represents a discount of about 6 percent to HDFC's closing price on Thursday, when Citi launched the process to sell its HDFC stake. Sources had said the bank had invited bids of between 630 rupees and 703.55 rupees a share.

The shares were bought by a large number of global funds as well as some local financial institutions, sources with direct knowledge of the process said. Citi was the sole bookrunner, they said.  - Reuters