The Gradual Set Up Of Investment Banking In India

By Author: Avendus
Total Articles: 117
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Investment banking is one of the widest concepts in Indian banking and finance industry right now. Presently, it is one of the sectors that has many growth opportunities. But do we really know what investment banking is? What exactly are the functions of an investment bank? To put in in simple words, investment bank is a financial institute, that aids and helps big corporates, HNIs (High Net Individual) and companies that are growing fast, to raise capital. Capital is one of the steppingstones for any business’s success. Other than this, an investment bank also provides services such as advising their clients during mergers and acquisitions, trading of securities or any other bigger investments. The securities in this context are usually debts, bonds and stocks.
The history of investment banking in India dates to the 19th century when the first trading houses were first set up by European merchant banks in India. And since then the investment and banking activities in India was dominated by the foreign forces in the country. Then, in the 1970, the State Bank ...
... of India entered this game of investment banking by establishing Bureau of Merchant Banking and ICICI securities, making them the first financial institution of India to offer merchant banking services. By the time we reached 1980s there was an exponential increase (30) in the number of merchant banks in India. The concepts like long short funds in India did not exist back then.
With the onset of last decade of the century, the AIBI (Association of Investment Bankers) had started to take off with around fifteen hundred bankers having registered with SEBI (Securities and Exchange Board of India). The sole reason of formation of the AIBI was to make sure that all the new banks that had started of comply to the specified rules and regulations of banking and to ascertain that every requirement was met. This regulation board that ensured the member institutes followed the legal and ethical practices was well established on these grounds.
Slowly and gradually, these investment banks started to function as asset management firms as well. Investment banking, although it still one of the biggest players in the financial sectors, asset management started to get some light too. With the number of HNIs and business growing in the country, the need of asset management companies also increased in the country. Asset management firms deal with providing their customers advice on investing their money in different kinds of assets. Based on the financial profile of the client, the asset management usually advices the client on which kind of assets they should invest in and what kind of returns can they expect.
Having a good back up of assets is good for any kind of business and individual. It forms a cushion from the blow of anything uncertain that life may throw at you. Hence, building up a good portfolio of assets may take time, but what’s necessary is that the portfolio is filled with food and valuable assets. Assets, that give return.