Investment Banking In India:Investment Opportunities, Banking Legislation
Investment banks are banking and financial organizations that offer financial, advisory, assets management and investment services to its clients. In addition to this, investment banks carry out research in market systems and other financial products like commodities, equities, currencies and much more with the intent of providing clients with credible monetary services.
Investment banks have been in the global scene for centuries with the sole aim of meeting challenges of innovations and latest developments confronting the financial markets.
New products and services are usually introduced to serve the clients and as well as develop new trading methods.
Investment banking innovations and developments can be patented and adopted by other banks, making it possible for other banking institutions to spring up with similar product and services.
About Investment Banks in India
Investment banks in India date to when the Europeans established the trading houses in the early 19th century. The first trading houses were inaugurated by the European Merchant Banks and since then, the Investment banks in India has been dominated by foreign investors.
The first indigenous bank was established by the government in the 1970s through the creation of the Bureau of Merchant banking as an institution to provide commercial banking services.
By the 1980s, commercial banks, the private sector and other financial had institutions increased the number of merchant banks to 30 through their massive involvement in the Investment banking sector of India.
List of Major Investment Banks in India
These are the top performing investment banks in India
- Bank of America: The Bank of America has been operational in India since its establishment in 1964. It is one of the most successful investments banks in the world and takes the position of the leading performing bank in India. It serves the both corporate and multinational financial institutions in India by offering financial solutions to their demands.
- Barclays Capital: Barclays Capital is a subsidiary of the Barclays Bank Plc with the vision to serving the Small and Medium Scales business groups in India. The company also shifts its radar to businesses with global appeal and provides financial advice and a range of financial management products.
- N. P. Paribas: This company was established in India in 1860 as C. N. E. P. They provide research, asset management and financial advisory services to local and international banks.
- Citi Bank: This company operates as a subsidiary of the Citi Group. It has been in Indian soils for over a century offering services in investment banking and asset management to both corporate and multinational institutions. They have an asset base of US $3.1million with presence across the countries of the world.
- Credit Suisse A.G.: Credit Suisse is renowned for its financial and securities services in the Cities of New Delhi and Mumbai. They also provide corporate organizations with financial advisory services and equity underwriting.
- Deutsche Bank: This is one bank with an unparalleled financial capability in the Indian and global financial sectors. They have a deep penetration into the private sectors through their top-rated financial services.
- P. Morgan: J. P. Morgan started its operations in India since 1930. As a foreign bank, it has served the Indian financial needs by offering services such as financial advisory, wholesale investment banking and so much more.
- Kotak Mahindra Bank Limited: Kotak Mahindra has carved a niche for itself when it comes to investment banking in India. It operates as Kotak Investment Banking and offers top notched financial advisory and capital marketing services.
- The Hongkong and Shanghai Banking Corporation Limited: This company popularly known as H.S.B.C started its banking operations in India in the year 1853. The three major financial solutions it provides includes; equities research and broking, worldwide investment banking and export and project finance.
- Yes Bank Limited: The Yes Bank Limited was established in 2004. Ever since, it has served the Indian populace through investment advisory, asset management and trading in various securities.
Investment Banking Firms
An investment bank is a financial firm which assists individuals, government, corporations, and agencies in raising capitals through the issuance of sureties and writing of equities. It also offers assistance to companies carrying out mergers and acquisitions, market making, trading of derivatives, foreign exchange and much more.
Outstanding Investment Banking Firms in India
This list comprises of top performing investment firms in India in addition to the above lists on Investment banks.
- ABN – Amro bank: this investment banking firm offers financial guides to corporate and multinational financial institutions as well as developers and investors in real estate property industry. It operates as AMRO Large Corporate and Merchant banking with headquarters located in the Netherlands.
- Australia and New Zealand Banking Group Limited: Popularly known as A.N.Z, the company has a strong coverage in India owing to the large human resources available in the country.
- Goldman Sachs Services Private Limited: Goldman Sachs has distinguished itself as a reliable partner in technology operations, research, and investment banking services. They advise several companies and financial institutions on mergers/acquisitions and other financial matters. It is situated in Mumbai and Bangalore from which it serves its teeming clients.
Other Investment banking firms include;
- Lehman Brothers Financial Services (India) Private Limited
- S. P Merrill Lynch Limited
- Morgan Stanley India Company Private Limited
Investment advisors are those financial institutions that guide and educate individuals and corporations on their monetary investments. The work of a financial advisor has become increasingly relevant these days due to challenges in market situations and enormous investment options available in the system.
The Indian market is deluged with attractive and sustainable Investment options for both locals and foreign investors because of its controlled economy and reliable banking services. It is important that each investor studies the numerous investment options available before selecting the one that suits his requirements.
Top Investment Options
Every investment has the condition of accruing short-term or long-term returns. It is necessary that an investor evaluates the requirement in cash for each investment option and the risk of receiving profits of investments in the short-run or long-run. Below are the lists of the paying investment options available.
Investment in Bank Fixed Deposits: Fixed deposits attract an investment profit of 9.25% for senior citizens based on the rules of the individual banks which makes it the most widely used investment option in India. It has a duration of 15days to 5 years before maturity.
Investment in Insurance Policies: insurance has been one of the most sought-after investment options as it helps to secure your assets and financial resources with minimal risks of profit loss.
Investment in National Saving Certificate: this is a government guaranteed and supported investment technique within a period of 6 years.
Investment in Stock Market: due to the changing stock system of India, the smart move in investment is to delve into numerous stocks placed in different industries. It should be noted that stocks come with risks, so one should be prepared to equate risk to the amount invested before depositing the funds.
Investment in Real Estate: the real estate sector in India has numerous benefits with prospects in commercial, retail, manufacturing, hospitality, housing, and healthcare sectors.
Other profitable investment options include:
- Investment in Equity
- Investment in a Gold deposit scheme
- Investment in Public Provident Fund
Which Bank Fix Deposit is Good for You?
Fix deposits have become one of the most applied methods of savings by investors. The reason for its wide patronage is its tendency to offer an increased return on investment compared to saving accounts. However, each bank offers its own interest rate with exciting options to its customers. With numerous options offered, it could be difficult to choose the right fix deposit suitable for you. Let’s consider this information as it will serve as a guide to making the best fix deposit choice.
- Features of Fixed Deposit: fixed deposits allow investors to deposit their funds for a duration of time. It offers higher returns than savings although investors can opt out by withdrawing his deposits anytime: before the actual maturity date.
- Choosing the appropriate fixed deposit: since different banks offer different fixed deposit options, it will be right to compare offers placed by different banks before investing. The major things to consider before deposit are:
- the amount you wish to invest
- the deposit periods
- interest rates presented by various banks
- Conditions attached to the premature withdrawal
Investment Scenario in India
Over the years India has become the one-stop place for investors around the globe. The conditions of investment in India have become increasingly convenient for investors with more investors willing to station their investment in the country. Today it has the 2nd largest GDP among developing nations and the 5th largest economy in the world.
Economists have predicted that India economy will overtake that of US by 60% in the future. The economy will also become stable at a macro level, but it is dependent on the volume of investment.
Chit Fund is a practice of saving which is exclusive to the Indians. It started about 1000 years ago among informal trading associations within the communities. It allows low-income earners to pile up their money into a large sum.
The operations of this scheme in India is governed by the Chit Fund Act of 1982 which defines it as an agreement between a person or a group of persons to that each of the will make donations in cash or kind periodically for a certain time after which a member should be entitled to the total amount realized which will be determined based on the contents of the agreements entered.
Reasons people invest in Chit Funds
- It is easy to participate than getting a bank loan
- There is the promise of higher returns
- The option of low deposits
- The possibility of itinerant collection by agents
Mutual funds can be defined as a system of created to professionally manage and invest funds collected from the public. It is the responsibility of the asset management institutions or companies to manage and invest mutual funds.
Mutual funds in India can be realized through short-term money market, pooling money in bonds, financial institutions, stocks, and securities etc. The profits realized from the investments are shared among the shareholders in the form of dividends.
Best Investment in India
The best investment options in India lies in the discretion of the investor due to the enormous potential available in the system. There are many parameters that are tuned towards the success of every investor. The market is robust owing to its population figure being positioned as the second largest in the world.
Although an investor will have to understand the fact that infrastructure in India is still in its developmental stage; especially road, power, traffic jam and low penetration of internet facilities.
Banking Legislation in India
The banking and financial services in India are subject to the regulations enshrined in the ‘Banking Regulation Act of 1949’. The 1934 Reserve Bank of India Act (RBI Act) authorizes the Reserve Bank of India to set rules, regulations, and obligations on all issues relating to banking and investment institutions. Thus, the RBI is the National Bank of India and serves as the regulating institution.
In addition to this, the government through the Ministry of Finance supervises and issue directives on the operation of banks and other financial institutions.
An investment bank is a financial institution that assists individuals and corporate organizations to raise capital and manage monetary assets. They also perform advisory functions on mergers and acquisitions. In event of companies in need of cash for the expansion of its business, Investment banks assist through the issuance of securities in the form of bonds and stocks.
The growth of the Indian economy is directly driven by the activities and performance of these Investment Banks. Their role in India and in the global market cannot be overemphasized.