UPDATE: 5/21/2013, 9:50 a.m. EDT. Information on the lawyers advising Morgan Stanley on the sale of its Indian wealth management unit to Standard Chartered has been added to the final paragraphs of this story.

Seven months after stepping down as head of global banking giant Citigroup, Vikram Pandit is making his return to the financial services industry by taking a 3 percent stake in Indian financial services firm JM Financial Group.

Davis Polk & Wardwell tax partner Avishai Shachar and corporate partner Louis Goldberg are advising Pandit on the deal, along with associates Brian Friedman and Ethan Goldman. Pandit is making the investment in Mumbai-based JM Financial along with his longtime business partner, Hari Aiyar, each of whom will own a 1.5 percent stake in the company. The deal by Pandit, who was born in India, is his first investment since being ousted at Citi last year.

As part of the deal, which was announced late last week, Pandit will serve as nonexecutive chairman of a nonbanking finance company set up by JM Financial in which he will take a 50 percent stake. The Reserve Bank of India is in the process of issuing new banking licenses for the first time in a decade, according to The Economic Times, and funds controlled by Pandit will invest up to $200 million in entities owned by JM Financial. The Financial Times reports that Pandit has designs on building a portfolio of investments in the United States and India.

Darius Udwadia, a founding partner of leading Mumbai firm Udwadia & Udeshi, is a member of JM Financial’s board of directors. JM Financial chairman Nimesh Kampani is a longtime friend of Pandit.

The former Citi CEO took home roughly $221.5 million during his five years with the New York–based banking giant, according to The Wall Street Journal. That sum includes the roughly $15 million in compensation Pandit was due after resigning his leadership role at Citi last October amid tensions with its board of directors. Michael Corbat, a former head of Citi’s European and Middle Eastern division, succeeded Pandit as CEO.

Davis Polk and Citi grew closer during Pandit’s tenure, especially with the onset of the financial crisis in 2008, as the firm advised Citi in connection with a $45 billion federal bailout. In 2009—a year that saw Pandit agree to collect a mere $1 in compensation as a result of Citi’s crippled financial state —Davis Polk advised the bank on its repayment of $20 billion in bailout funds.

George "Gar" Bason, cohead of Davis Polk’s M&A practice, was named one of The American Lawyer‘s Dealmakers of the Year in 2009 for his role representing Citi on a joint venture with Morgan Stanley. Bason and Davis Polk also handled a transaction in which the U.S. Department of the Treasury took an equity stake in Citi, as well as Citi’s subsequent $1.26 billion sale of a chunk of its Japanese operations. (When Treasury began cashing out of its Citi stake in a move that generated a reported $12 billion profit, Davis Polk was once again on hand.)

Pandit joined Citi in 2007 when the bank spent $800 million to acquire his hedge fund, New York–based Old Lane, in a deal that netted him a $165 million windfall. Davis Polk advised Old Lane on that transaction, which helped bring the firm closer to picking up Citi-related legal work at a time when rapid consolidation within the financial services sector created conflicts for other top Wall Street firms, according to our previous reports.

One casualty of Citi’s post-Pandit era was former Davis Polk partner Lewis Kaden, a man deemed " the most powerful banker you’ve never heard of" by Bloomberg BusinessWeek in 2009. Kaden, who became a vice-chairman at Citi in 2005, left the bank earlier this year following Pandit’s departure.

One of Citi’s current vice-chairs, Michael Helfer, spent nearly a decade as the bank’s general counsel and corporate secretary. A former partner at a predecessor firm of Wilmer Cutler Pickering Hale and Dorr, Helfer was promoted last year following Citi’s hire of former Shearman & Sterling senior partner Rohan Weerasinghe to become its new general counsel, according to our previous reports.

Pandit’s investment in JM Financial wasn’t the only India-related financial services deal announced in recent days. On Monday, New York–based Morgan Stanley disclosed that it is selling its Indian wealth management unit to British bank Standard Chartered for an undisclosed sum, although local media reports but the amount at under $10 million.

Amarchand & Mangaldas & Suresh A. Shroff & Co., one of India’s largest firms, took the lead advising Morgan Stanley on the sale. Eric Grossman, a former Davis Polk financial institutions partner, was promoted last year to general counsel of Morgan Stanley. London-based Standard Chartered, whose in-house head of legal is James Ellington, used Indian firm Trilegal for outside counsel on the deal.

In March, Magic Circle firm Clifford Chance advised Morgan Stanley on the sale of its European private bank to Swiss banking giant Credit Suisse for an undisclosed sum. The unit, which has $13 billion in assets under management, included all of Morgan Stanley’s wealth management businesses in Africa, the Middle East, and Europe, excluding Switzerland, according to our previous reports.

In 2011, Morgan Stanley named former Clifford Chance senior partner Stuart Popham a vice-chair of banking for its Africa, Middle East, and Europe unit.