It is the most popular concept in Indian finance and banking right now. It is one of the fastest growing sectors. But what exactly is investment banking? What are the main functions of an investment bank? An investment bank is a financial institution that assists large corporations, high net individuals (HNIs), and companies in rapid growth to raise capital. Capital is a key stepping stone to any company’s success. An investment bank can also provide services like advising clients in mergers and acquisitions, trading securities, or other larger investments. This includes stocks, bonds, and debts.
Investment banking in India has a long history. It all began in the 19th century, when Indian merchant banks established the first trading houses. Since then, India’s foreign-dominated foreign powers have dominated Indian banking and investment activities. In 1970, the State Bank of India began to play in investment banking. They established Bureau of Merchant Banking, ICICI Securities, and became the first Indian financial institution to offer merchant banking services. The number of Indian merchant banks grew exponentially (30) by the 1980s. Back then, concepts such as long short funds in India were not possible.
The Association of Investment Bankers (AIBI) was established with approximately fifteen hundred bankers who had registered with SEBI (Securities and Exchange Board of India) at the beginning of the last decade of this century. The AIBI was created solely to ensure that all new banks comply with the banking regulations and that each requirement is met. These were the foundations of the regulation board, which ensured that member institutions followed ethical and legal practices.
Slowly, but surely, these investment banks began to function as asset managers. Although investment banking is still a major player in the financial sector, asset management began to gain some light. The country’s growing population of HNIs and businesses has meant that asset management companies are more in demand. Asset management companies offer advice to their clients on how to invest their money in different types of assets. The client’s financial situation is usually used to inform the asset management firm about which assets and what returns they can expect.
A good backup plan is a benefit for every type of business or individual. It provides a cushion against the unexpected. While building a portfolio of assets can take some time, it is worth the effort. Assets that provide return.