Top 8 Investment Banks In India For You – A Detailed Analysis
Investment is dedicating our money to purchasing an asset, keeping it over a while, and then selling it after its value has increased. It is like sacrificing our present assets such as our money, time, or effort. From a financial point, investing aims to generate a profitable return from the invested assets. Assets that can be used for investing are some parts of our property, also known as real estate, buying stocks. Investors who perform the act of investing expect high returns from riskier investments. Investment Banks in India have protocols and policies that one needs to follow to get the best profits in investment.
Along with lots of profit in long term, Investments also consist of losses. Investment loss is defined as a decrease in the value of an asset relative to the expected value, which can result in a loss. There are some risks in investment. Investment risk, also known as financial risk, is the possibility of occurring losses relative to expected return. In simple terms, it is a measure of uncertainty to achieve the returns per expectations.
There are two types of Investment risk. High-risk Investment and Low-risk investment. As the name suggests, the risk of losing money is low in low-risk investments, but the profit gained is also common. But in high-risk investments, the chances of losing money are higher, but the profit is also high.
The investment banks in India give a good profit when done in the long term. Novice investors need to build a diversified portfolio to start a successful career in the competitive market. Statistically, Diversification of the portfolio reduces the risk of losses. Investors need to bear the risk of losing part of their capital, and sometimes they might lose overall capital. But at the same time, they can also receive unexpected profits.
Profits that can transform the life of investors. Investing in tangible assets such as property has more profit. Due to the increase in population, the value of properties and real estate will increase in the upcoming years. But the property also has its own risk. And to mitigate the possible risk, property buyers take a mortgage and borrow loans on the properties.
Moving into investment banking is a choice if one wants to become a high-flying professional who wants to be a big giant in the investment world. One must know the overall scenario of India’s banking system. Investment Banks in India work pretty much the same as in other countries but at the same time, they also differ in some factors such as the kind of services offered, their culture, investment banking salaries, investment baking jobs, and investing banking profile.
History of Investment Banks in India
The concept of investment banking in India came around in the 19th century. European banks came to India and established their trading industries during that time. Since then, foreign merchant banks have been dominating and ruling investment and merchant banking in the country. But that didn’t last long.
In the 1970s, the State Bank of India came into the light and formed a bureau of merchant banking. And then, the ICICI Bank into existence and offered various merchant services. When these banks became a thing of many, more than 30 merchant banks, financial institutes, and commercial banks were established and started offering their services in the next decade.
Somehow, back then in the 1980s, banks could not get the hype they were looking for. But then in the 1990s, the SEBI (Securities and Exchange Board of India) came and constituted some new policies that made investment banking in India an industry and then more than 1500 banks registered themselves with the SEBI.
Due to an increase in the number of banking institutes, the government was in need to build an organization that can help the banks adhere to the compliance, protocols, and regulations. And that is why the Association of Investment Bankers of India (AIBI) was formed. Its mission is to regulate members’ legal and ethical activities while also promoting and encouraging the industry’s growth. Many investment banks and financial institutes are registered under it.
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List of Major Investment Banks in India
Below we have listed the top 8 investment banks in India.
- Axis Bank Ltd.
- Central Bank of India
- SBI Capital Markets Ltd.
- Barclays Bank PLC
- BNP Paribas
- IBDI Bank
- JM Financial
- Morgan Stanley
1. Axis Bank Ltd.
Axis Bank Ltd, earlier known as UTI bank, was established in 1993. It is an Indian banking and financial services company and is on the top list of the best investment banks in India. The company’s headquarters is in Mumbai, Maharashtra. The bank office is established in almost every city and every state. It provides financial services to big and mid-sized organizations, as well as SMEs and retail firms.
About 30% of the bank shares are owned by the promoter groups, that consist of United India Insurance Company Limited, National Insurance Company Limited, Oriental Insurance Company Limited, New India Assurance Company Ltd, GIC, LIC, and UTI. And the remaining 70% of shares belong to banks, mutual funds, FIIs, insurance companies, corporate bodies, and individual investors.
The Main Services That Are Offered by the Bank Are:
- Retail Banking
- Corporate Banking
- International Banking.
Retail Banking:
In Retail Banking, the bank offers lending services to individuals and small-scale and large-scale companies. Along with lending services they also offer liability products, Credit Card and Debit Card services, Internet Banking, Financial advisory services, depository services, Automated Teller Machines (ATM) services, and Non-Resident Indian (NRI) services. The bank is also on the participants list of RBI NEFT-enabled participating banks list.
Corporate Banking:
Corporate Banking is divided into two categories – Transaction Banking and Investment Banking and Trustee Services. In transaction banking, the bank provides money transaction services to the customers along with other transaction banking products and services such as current accounts, cash management services, capital market services, trade, foreign exchange and derivatives, cross-border trade and correspondent banking services, and tax collections on behalf of the Indian government and various state governments. Investment banking and trustee services are offered by the bank through the help of its owned subsidiaries.
International Banking:
International Banking is when the bank offers, through its locations in Singapore, Hong Kong, DIFC, Shanghai, and Colombo, corporate banking, trade finance, treasury, and risk management, as well as retail liability products. The inauguration of the representative office in Dhaka took place during the current fiscal year.
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2. Central Bank of India
Mumbai-based Central Bank of India (CBI) is a public sector bank in India. The Central Bank of India, which claims to be the first commercial Indian bank entirely owned and run by Indians, was founded on December 21 by Sir Sorabji Pochkhanawala and Sir Pherozeshah Mehta. The Central Bank of India established a branch in Hyderabad in 1918. In 1925, a branch opened in the neighbouring city of Secunderabad.
In 1923, it bought the Tata Industrial Bank when the Alliance Bank of Shimla failed. In 1920, the 1917-founded Tata bank opened a branch in Madras that would later become the Central Bank of India, Madras. The Central Exchange Bank of India, the country’s first exchange bank, was founded with help from the Central Bank of India and debuted in London in 1936. However, the Central Exchange Bank of India was purchased by Barclays Bank in 1938. Among others, this one is also one of the best investment banks in India.
The Central Bank of India opened a branch in Rangoon before World War II. The branch’s operations were focused on trade between Burma and India, particularly telegraphic money transfers. Margin and foreign exchange have a major role in generating profits. Additionally, the bank made loans to enterprises, especially in India, secured by the land, produce, and other assets. The activities of the Central Bank of India in Burma were nationalized in 1963 and became People’s Bank No. 1 as a result.
On July 19, 1969, the Indian government nationalized the bank along with 12 other financial institutions. The Central Bank of India’s Shankar Sheth Road Branch in Pune has a name board. Brabourne Road Branch of the Central Bank of India in Kolkata. In 1980, the Central Bank of India, along with Mastercard, was one of the first banks in India to start issuing credit cards. The Central Bank of India unveiled “MEDHA,” a robot, on its 108th Foundation Day as its first move toward robotic banking.
Twelve public sector banks in India underwent recapitalization in 2009, including CBI. As of the end of March 2021, the bank operated a network of 4,600 branches, 3,600 ATMs, ten satellite offices, and one extension counter. It is present across all 28 Indian states, seven of the eight union territories, and 600 district headquarters out of the total number of districts in the nation.
The management of the Central Bank of India, Punjab National Bank, and Union Bank of India’s London branches was implicated in a scam in the 1980s when they provided Rajender Singh Sethia, a Bangladeshi jute dealer, with questionable loans. All three Indian banks had their London branches shut down by order of the regulatory bodies in both England and India. It is one of the best choices for Investment Banks in India among the other banks.
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3. SBI Capital Markets Ltd.
A fully owned investment banking subsidiary of the State Bank of India is SBI Capital Markets (SBICAPS) (SBI). With its main office in Mumbai, SBICAP also has four subsidiaries: SBICAP Securities Limited, SBICAP Trustee Company Limited, SBICAP Ventures Limited, and SBICAP (Singapore) Limited. The company also has five regional offices in India: Ahmedabad, Chennai, Hyderabad, Kolkata, and New Delhi. SBICAP provides a full range of business advising and investment banking services. Project advisory and structured financing, capital markets, mergers and acquisitions, private equity, and the resolution of stressed assets are all included in the service bouquet under one umbrella.
State Bank of India (SBI), Also known as one of the best Investment banks in India, is a statutory organization for financial services and a multinational public sector bank with its headquarters in Mumbai, Maharashtra. SBI, the only Indian bank on the Fortune Global 500 list of the biggest companies in the world in 2020, is ranked 221 overall and is the 49th-largest bank in the world by total assets.
With a 23% market share by assets and a 25% cent of the whole loan and deposit market, it is a public sector bank and the biggest bank in India. Around 260,000 employees in the company, making it India’s fifth-largest employer. The State Bank of India crossed the $5 trillion market capitalization threshold on the Indian stock markets for the first time on September 14, 2022, becoming the third lender (after HDFC Bank and ICICI Bank) and the seventh Indian corporation to do so.
The bank is the oldest commercial bank in the Indian subcontinent and descended from the Bank of Calcutta, established in 1806 through the Imperial Bank of India. The Bank of Madras combined the Bank of Calcutta and the Bank of Bombay, the other two presidential banks in British India, to establish the Imperial Bank of India. Later its name changed to the State Bank of India.
Throughout its 200-year existence, the bank has been chiefly founded via the merger and purchase of over twenty institutions. The Reserve Bank of India, India’s central bank, acquired a 60% interest in the Imperial Bank of India when the Indian government assumed control of it in 1955, renaming it the State Bank of India. The State Bank of India (SBI) announced the opening of its first “state-of-the-art” dedicated branch for start-ups in the country in Bengaluru on August 16, 2022, to facilitate and support them. Due to its services, it got its place in the list of top investment banks in India.
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4. Barclays Bank PLC
Barclays is a British multinational universal bank, which works on two divisions, Barclays UK and Barclays International. The bank has its headquarters in London, England, and is supported by Barclays Execution Services. Barclays can trace its roots back to the City of London’s 1690 establishment of the goldsmith banking sector. In 1736, James Barclay joined as a partner in the company.
Twelve banks, including Goslings Bank, Backhouse’s Bank, and Gurney, Peckover, and Company, from London and the English provinces merged to become Barclays and Co. in 1896. Barclays become one of the most popular and widely used international banks in recent decades. The first cash dispenser in history was installed by Barclays, in 1967. Numerous businesses have been acquired by Barclays, including the Woolwich in 2000, the London, Provincial, and South Western Bank in 1918, the British Linen Bank in 1919, the Mercantile Credit in 1975, and the North American operations of Lehman Brothers in 2008.
Barclays is a component of the FTSE 100 Index and has a primary listing on the London Stock Exchange. It is also listed second on the New York Stock Exchange. The bank is the first choice for selecting the best investment banks in India. According to the Financial Stability Board, the bank is considered a systemically very crucial bank.
As per the 2011 paper, in terms of ownership and taking corporate control over global financial stability and market competition, the bank was the most powerful transnational organization. Barclays is the fifth-largest bank in Europe by its total assets, with a presence in over 48 countries and employing around 75,000 people. The bank is also one of the largest funders of fossil fuel companies in Europe.
The services offered by Barclays UK are British retail banking services, customer credit, and debit card services, health management services, and corporate banking services for small, medium, and large businesses in the UK. Barclays International is comprised of Barclays Corporate and Investment Bank, also known as Barclays Capital, and the Customer, Cards, and Payments division.
Large corporations, institutions, and government clients can obtain advice, funding, and risk management services from the investment banking industry. It is a major dealer in gilts, U.S. Treasury bonds, and several European government bonds. It is also one of the best Investment banks in India.
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5. BNP Paribas
In 2000, Banque Nationale de Paris (BNP, “National Bank of Paris”) and Paribas, originally known as the Banque de Paris et des Pays-Bas, merged to establish BNP Paribas, a French multinational banking conglomerate. The full name of the group’s parent company is BNP Paribas S.A.
The bank is structured into three main business areas: Commercial, Personal Banking & Services (CPBS), Investment & Protection Services (IPS), and Corporate & Institutional Banking (CIB). As of February 2021, it has 190,000 workers. The company is listed on Euronext Paris’s First Market and is a part of the Euro Stoxx 50 stock market index and the French CAC 40 index.
After HSBC, BNP Paribas is the second-largest banking group in Europe and ranks ninth among all banking groups globally, making it virtually a bulge bracket. After the 2008 financial crisis, it rose to rank among the top five banks globally. It is still one of the top 10 banks in the world and the top investment banks in India despite several legal issues in 2014, such as receiving the largest-ever penalties for breaking U.S. sanctions. As per the Financial Stability Board’s views, this bank is considered of systemic importance. BNP investment banks in India are very profitable.
The creation of BNP Paribas is the product of several French and international mergers. Notable events include the 1966 merger of Comptoir National d’Escompte de Paris and Banque Nationale pour le Commerce et l’Industrie, which became BNP, and the 1999–2000 merger of BNP with Paribas.
The acquisitions by BNP Paribas of Banca Nazionale del Lavoro in Italy in 2006 and of Fortis in Belgium and the Netherlands in 2008 were two other notable recent transactions. Paribas actively pursued acquisitions and divestitures during the 1990s. This includes establishing the joint venture lending business Cetelem in Germany and selling the Ottoman Bank to Douş Holding. In addition to selling Crédit du Nord to Société Générale, it merged with Compagnie Bancaire in 1998, renaming the institution Compagnie Financière de Paribas. Also considered one of the best Investment banks in India.
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6. IDBI Bank
The Life Insurance Corporation of India and the Indian government jointly own The IDBI Bank Limited (IDBI Bank or IDBI), a development finance institution. It was founded in 1964 as the Industrial Development Bank of India, a development finance organization that offered financial support to the manufacturing sector. The organization was categorized under the “other development finance institution” category after merging with its commercial business, IDBI Bank, in 2005 to create the current banking corporation.
Due to substantial NPA and capital adequacy difficulties later in March 2019, the Indian government instructed Life Insurance Corporation to inject capital into the bank. They also asked LIC to run the bank to comply with regulatory requirements.
Currently, the Government of India owns a direct and indirect 95% stake in IDBI Bank. In a communication dated December 17, 2019, the Government of India (GoI) clarified this situation and instructed all Central and State Government departments to consider IDBI Bank when allocating government business. SIDBI, EXIM, the National Stock Exchange of India, SEBI, and National Securities Depository Limited are just a few of the national institutions that have their roots in IDBI.
As of March 31, 2016, the bank’s total balance sheet was 3.70 trillion. As of 1 February 2020, it has 3,600 ATMs, 1,890 branches, one of which was overseas in Dubai, 60 E-lounges, and 1,400 centres. As of September 2021, the Life Insurance Corporation (LIC) controlled 50% of the bank’s shares, while the Central Government (CG) held 45%.
The equity shares of IDBI Bank are traded on the National Stock Exchange of India and the Bombay Stock Exchange. The Union government-owned 45% of the shares of IDBI Bank as of September 2021, followed by LIC with 50% and non-promoters with the remaining shares.
The bank employed 16,000 people as of the end of March 2015, including 200 people with impairments. On that day, bank workers were 35 years old on average. During the fiscal year 2012–2013, the bank recorded a business of 25 crores and a net profit of 12 lakhs per employee. During the same financial year, the corporation lost 1,538 crores on employee benefit costs.
7. JM Financial
The Indian financial services company JM Financial (JMFL) has offices throughout the country and its headquarters are in Mumbai. Although the majority of the group’s activity is conducted domestically in India, it also has branches abroad in Ebene, Singapore, New Jersey, and Dubai. Nimesh Kampani established JM Financial in 1973, first establishing it as a consulting firm.
It was established as a private limited company in 1986 to do stock brokerage. It became a publicly traded corporate group in 1991 after going public on the Bombay Stock Exchange, and in 2006 it staged a secondary listing on the National Stock Exchange of India. In addition to stockbroking, the organization expanded into other industries, including asset management in 1994, private equity in 2006, real estate investment in 2007 and distressed credit in 2008, as well as mortgage lending in 2017.
JM Financial and Morgan Stanley established the JM Morgan Stanley Joint Venture in India in 1999. The JM Morgan Stanley Joint Venture arrangement came to an end in February 2007, according to Morgan Stanley. In the institutional brokerage sector, it bought JM Financial’s 50% holding, while it sold JM Financial its 50% interest in the investment banking sector.
Investment banking, wealth management, securities business (IWS), mortgage lending, distressed credit, and asset management are JM Financial’s four primary business sectors. The majority of the group’s revenue comes from the IWS and mortgage lending areas. Almost all of the group’s income comes from only one country: India and is among the best Investment banks in India.
8. Morgan Stanley
The global American financial services and investment management business Morgan Stanley has its headquarters at 1585 Broadway in Midtown Manhattan, New York City. The firm provides services to individuals, groups, governments, and enterprises. More than 75,000 people work for it, and it has operations in more than 41 nations. Morgan Stanley was ranked No. 61 on the 2021 Fortune 500 list of the largest American companies based on total sales. In response to the Glass-Steagall Act, which required the partition of American commercial and investment banking organisations, Henry Sturgis Morgan (J.P. Morgan’s grandson), Harold Stanley, and other J.P. Morgan & Co. partners founded the first Morgan Stanley on September 16, 1935. In its first year of operation, the company’s market share for both public offerings and private placements is 24%, or approximately US$1.1 billion.
The current Morgan Stanley was created in 1997 with the merger of the previous Morgan Stanley and Dean Witter Discover & Co. The newly united “Morgan Stanley Dean Witter Discover & Co.” is headed by Philip J. Purcell, Chairman, and CEO of Dean Witter.
The newly formed business resumed using the name “Morgan Stanley” in 2001. At present, the company’s three main business segments are institutional securities, wealth management, and investment management. The bank is regarded by the Financial Stability Board as being of systemic importance.
Through its affiliates and subsidiaries, the financial services firm Morgan Stanley advises businesses, governments, and individuals on how to raise, exchange, manage, and distribute money. The three business segments into which the corporation is separated are Institutional Securities, Wealth Management, and Investment Management. The bank earned a spot among the top investment banks in India as a result of its services.
Frequently Asked Questions (FAQ)
Q1. What is an Investment Bank?
An investment bank is a type of financial organization that helps powerful people, businesses, and governments raise funds by underwriting securities or serving as their agent throughout the issue process. An investment bank may also offer support services for market-making and the trading of different securities and help businesses with mergers and acquisitions. Investment banks make money by charging clients fees and commissions for these services as well as other forms of business and financial advice.
Q2. How do investment banks aid businesses in M&A transactions?
Investment banks are crucial to the acquisition process, starting with the initial consideration by businesses. When a buyer or seller considers an acquisition, the respective board of directors may decide to form a special committee to assess the merger proposal. In most cases, the acquiring company hires an investment bank to provide advice, assess the terms and price of the transaction, and aid in the financing of the acquisition.
Q3. How can investment banks assist businesses in raising capital?
Investment banks often assist customers with debt and stock offerings to raise capital. This includes obtaining capital through initial public offerings (IPOs), bank credit lines, the sale of shares to investors through private placements, or the creation and resale of bonds on the client’s behalf.
Conclusion
Investment Banks in India have different terms and conditions as compared to other European banks. But some of the rules and regulations are still the same because the concept of the bank was established by European merchants. India is still a developing country and a lot needs to change in terms of policies so that fraudulence can be avoided. However, the Investment Banks in India are very much better than earlier. In general, investment banking benefits people by providing support in significant, complex financial transactions. When a firm becomes public, they also offer the security that is required. The majority of the investment banking firms in our nation are situated in tier-one Indian cities like Mumbai, Delhi, Bangalore, etc.
Investment banks gain from the long-term income and costs they accumulate. They are also recognized as a unique area that offers financial advice, as well as numerous specialists and clients who have shared, what they would like to buy. The banks above have been carrying out this practice for a very long time. The investment banking procedure stays up with the current status of their own nations’ economic concerns, much like recent periods that have been functioning based on recent developments.
