Analysis of Investment Banks in India

“Analysis of Investment Banks in India”
PROJECT BY:
Kiel D’Silva
T. Y. B. M. S.
PROJECT GUIDE:
PROF.Abhishek Sood
SUBMITTED TO
UNIVERSITY OF MUMBAI
ACADEMIC YEAR 2015-2016
ST. ANDREWS COLLEGE OF ARTS, SCIENCE & COMMERCE

ST. DOMINIC ROAD, BANDRA (WEST)
MUMBAI - 400 050
CERTIFICATE
I, Prof. Abhishek Sood, hereby certify that Kiel D’Silva of St. Andrews
College of TYBMS has completed his project, titled ‘Analysis of
Investment Banks India’ in the academic year 2015-16. The information
submitted herein is true and original to the best of my knowledge.
_________________ ___________________
Signature of Project Guide Signature of B.M.S. Coordinator
_______________ _______________
Signature of Principal Signature of External Examiner
DECLARATION
I, Kiel D’Silva, of St. Andrews College T.Y.B.M.S. declare that I have

completed the research project on the topic of “Analysis of Investment
Banks India” in the academic year 2015-16. The information submitted
herein is true & original, to the best of my knowledge.
DATE: SIGNATURE OF STUDENT
PLACE: MUMBAI KIEL D’SILVA
TYBMS
3506
ACKNOWLEDGEMENT
First of all I would like to thank God for blessing me with strength & patience to
complete my project.
I would also like to express my gratitude towards my guide for her valuable time &
effort to help me in this project.
I thank the university of Mumbai for giving me a platform to explore my mind
through this project.
And most importantly a big thank you to my parents, sisters & brothers & my
friends for all the help extended by them.
OVERVIEW
Investment banking includes a wide variety of activities, including underwriting, selling, and
trading securities, providing financial advisory services,and managing assets. Investment banks
cater to a diverse group of stakeholders companies, governments, non-profit institutions, and
individuals and help them raise funds on the capital market. They perform the following major
functions for their customers:
· Serve as trading intermediaries for clients

· Lend and invest banks' assets

· Provide advice on mergers, acquisitions, and other financial transactions

· Research and develop opinions on securities, markets, and economies

· Issue, buy, sell, and trade stocks and bonds

· Manage investment portfolios

Investment banks once contrasted sharply with commercial banks, where people mainly
deposited their money and sought commercial and retail loans. In recent years, though, the two
types of structures have become increasingly similar;commercial banks now offer more
investment banking services as they attempt to corner the market by presenting themselves as
one-stop shops. Investment banks do differ from brokerages and broker-dealers, though,even
though those three entities are often thought of as one and the same. A brokerage firm takes a
commission for assisting in the purchase and sale of stocks, bonds, and mutual funds. A
broker-dealer executes similar functions, but it also trades for its own account. An investment
bank actually is a broker-dealer that provides corporations with financial services, such as
assistance with initial public offerings, merger and acquisitions advice, and strategic planning.
TABLE OF CONTENTS
Page No.
CHAPTER I
1. P
urpose of research 11
2. M
otivation of research 11
3. R
esearch design 12
4. S
ources of data 12
4.1. I nternet 12
4.2. I nterviews 12
5. P
rocessing and analysing data 13
6. P
reparing the research project 13
7. R
esearch limitations 13
CHAPTER II
1. Introduction
13
2. What is investment banking?

14
3. Evolution of investment banking

14
4. Introduction of the industry

17
5. Service portfolio of investment banks
17
5.1 Issue of securities, underwriting & merchant banking

20
5.2 Mergers & Acquisitions Advisory

21
5.3 Asset Management

23
5.4 Secondary Market Activities

24
5.4.1 F
ull Service Brokers & Discount Brokers 25
5.4.2 S
ales and Distribution 26
5.4.3 R
esearch 27
5.4.4 I nstitutional Investing 28
5.4.5 W
ealth Management Services 29
5.4.6 C
orporate Advisory 29
5.4.7 D
erivatives 30
CHAPTER III
1. R
egulatory Framework for Investment Banks 30
2. S
kills Suggested for Investment Bankers 33
2.1. T
echnical 33
2.2. C
ommunication 37
2.3. O
ther 38
3. R
ole of Investment Banking Companies in India 39
4. T
ypes of Players in Investment Banking 40
5. L
ist of Major Investment Banks 40
5.1. Full Service Firms 40
5.2. Commercial Banks 40
5.3. Boutique Firms 40
5.4. Brokerage Firms 41
5.5. F
irms 41
6. S
cope 42
7. P
otential for Investment Banking in India 46
8. T
he Factors on which Growth od Investment Banks depends 46
9. E
nvironmental Scanning 47
10. Swot Analysis 49
11. Role of Investment Bankers in Developing an Economy 51
CHAPTER IV
1. P
rimary Data 53
2. Q
uestionnaire 53
3. A
nalysing primary data 54
4. C
ase study 56
5. C
onclusion 81
6. B
ibliography 81
7. A
nnexure 82
LISTS OF TABLE & FIGURES
1. F
igure 2.1 18
2. F
igure 2.2 19
3. T
able 3.1 41
4. F
igure 3.2 46
5. F
igure 3.3 50
6. T
able 4.1 74
7. F
igure 4.2 75
8. T
able 4.3 75
9. F
igure 4.4 76
10. Figure 4.5 76
11. Table 4.6 76
12. Figure 4.7 77
13. Table 4.8 77

14. Figure 4.9 77
15. Table 4.10 78
16. Figure 4.11 78
17. Table 4.12 78
18. Figure 4.13 79
19. Table 4.14 79
20. Figure 4.15 79
CHAPTER I
1. P
urpose Of Research
Is to understand how investment banks have evolved over time and how they fuction at various
levels and differentiate themselves from commercial banks.
2. M
otivation Of Reseach
· Giving our contribution towards the growth and development of investment banking

· Understanding the current and potential client for the investment bank their need and wants

· Analysis of future growth and prospects of investment banking

· Finding out the major player of investment banking and the leaders

· Molding our career in the field of investment banking like financial analyst and associate

· Understanding the required qualification in the field of investment banking

· To learn how the investment banks underwrite new debt and equity securities for

corporations and also how they provide guidance to issuers regarding the issue and placement of
stock.
· Understanding help to facilitate mergers and acquisitions, reorganizations and broker trades

for both institutions and private investors.
· Understanding that what type of strategy used by these organization.

3. R
esearch Design
A good design is where the components work harmoniuosly together, promotes efficient and
successful functioning. my project is a combination of reviewing other research and descriptive
research, as all my findings are based on both primary as well as publicly available secondary
data.
4. S
ources of Data
After listing down the methods of study and the activities to be done to complete my project, I
started with establishing firm definitions and a general consensus on the issues and the factors
relative to Investment Banks. My project is based on primary as well as secondary data which
involves a logical analysis and interpretation of secondary data.
A. Internet
After having a general idea on the mechanics on Investment Banking, I had to understand the
various motives behind the services offered and how they created profit generating activities
from these services. As a result I visited various websites containing articles and user forums that
have provided relevant data for the study.
B. Interviews
I have conducted open ended structured interviews with employees of investment banks and
commercial banks for the purpose of gaining first hand knowledge and opinions relvant to the
study. Two interviews were conducted.
5. P
rocessing and Analysing Data
After collecting all the required data, now I was left with the task of analysing the data from all
relevant aspects. It was essential to present the data in the correct form. Hence usage of various
graphs and images is done in the project to make it easier and appropriate to understand.
6. P
reparing the Research Project
After collecting and analysing all the data, the final report was prepared taking into consideration
all the facts and looking at the topic from all the relevant aspects.
7. R
esearch Limitations
I was not able to visit some investment bankers due their busy schedules and constant travelling
for work. A lot of the questions were answered through hypothetical situations as they could not
divulge confidential information.

CHAPTER II
INTRODUCTION
Investment banking is a specific division of banking related to the creation of capital for other
companies. Investment banks underwrite new debt and equity securities for all types of
corporations. Investment banks also provide guidance to issuers regarding the issue and
placement of stock.
In addition to the services listed above, investment banks also aid in the sale of securities in some
instances. They also help to facilitate mergers and acquisitions, reorganizations and broker trades
for both institutions and private investors. They can also trade securities for their own accounts.
What is Investment Banking?
· A person or organization sometimes acts as an underwriter or mediator for corporations and

municipalities issuing securities.
· Most of them also preserve broker-dealer operations to maintain markets for formerly issued

securities and suggest advisory services to investors.
· Investment banking also has a large role in facilitating mergers and acquisition, private

equity placements and corporate restructuring.
Evolution of Investment Banking in India
The origin of investment banking in India can be traced back to the 19th century when European
merchant banks set-up their agency houses in the country to assist in the setting of new projects.
In the early 20th century, large business houses followed suit by establishing managing agencies
which acted as issue house for securities, promoters for new projects and also provided finance
to Greenfield ventures. The peculiar feature of these agencies was that their services were
restricted only to the companies of the group to which they belonged. A few small brokers also
started rendering Merchant banking services, but theirs was limited due to their small capital
base.
In 1967, ANZ Grindlays bank set - up a separate merchant banking division to handle new
capital issues. It was soon followed by Citibank, which started rendering these services. The
foreign banks monopolized merchant banking services in the country. The banking committee, in
its report in 1972, took note of this with concern and recommended setting up of merchant
banking institutions by commercial banks and financial intuitions. State bank of India ventured
into this business by starting a merchant banking bureau in 1972. In 1972, ICICI became the first
financial institution to offer merchant banking services. JM finance was set-up by Mr. Nimesh
Kampani as an exclusive merchant bank in 1973. The growth of the industry was very slow
during this period. By 1980, the number of merchant banks rose to 33 and was set-up by
commercial banks, financial institutions and private sector. The capital market witnessed some
buoyancy in the late eighties. The advent of economic reforms in 1991 resulted in sudden spurt
in both the primary and secondary market. Several new players entered into the field. The
securities scam in may, 1992 was a major set back to the industry. Several leading merchant
bankers, both in public and private sector were found to be involved in various irregularities.
Some of the prominent public sector players involved in the scam were Can bank financial
services, SBI capital markets, Andhra bank financial services, etc. leading private sector players
involved in the scam included Fairgrowth financial services and Champaklal investments and
finance (CIFCO).
The market turned bullish again in the end of 1993 after the tainted shares problem was
substantially resolved. There was a phenomenal surge of activity in the primary market. The
registration norms with the SEBI were quite liberal. The low entry barriers coupled with
lucrative opportunities lured many new entrants into this industry. Most of the new entrants were
undercapitalized with little or no expertise in merchant banking. These players could hardly
afford to be discerning and started offering their services to all and sundry clients. The market
was soon flooded with poor quality paper issued by companies of dubious credentials. The huge
losses suffered by investors in these securities resulted in total loss of confidence in the market.
Most of the subsequent issues started failing and companies started deferring their plans to
access primary markets. Lack of business resulted in a major shake out in the industry. Most of
the small firms exited from the business. Many foreign investment banks started entering Indian
markets. These firms had a huge capital base, global distribution capacity and expertise.
However, they were new to Indian markets and lacked local penetration. Many of the top rung
Indian merchant banks, who had string domestic base, started entering into joint ventures with
the foreign banks. This energy resulted in synergies as their individual strength complemented
each other.
Introduction of the Industry
Investment Banks help companies and governments issue securities, help investors purchase
securities, manage financial assets, trade securities and provide financial advice. The top
investment banks including Goldman Sachs, JP Morgan and Morgan Stanley are said to be in
the bulge bracket.
Other investment banks are regionally oriented or situated in the middle market (e.g. Piper
Jaffray). Others are small, specialized firms called boutiques which might be oriented toward an
industry vertical, bond-trading, M&A advisory, technical analysis or program trading. Firms
have lots of different areas and groups within them. In most firms, there is sales and trading
which works with owners of securities, investment banking which works with issuers of
securities (firms and governments) and capital markets which goes in between the other two.
SERVICE PORTFOLIO OF INVESTMENT BANKS
Investment banks handle significant fund-based business of their own in capital market along
with non-fund service portfolio which is offered to clients. All this activities are segmented
across three broad platforms – equity market activity, debt market activity & mergers &
acquisition activity. Investment banks differ in the way they conduct their activities. These
differences may arise due to their evolution, strategies & the way the strategies are implemented.
Other factors that can influence investment banking operations are as follows:-
· Wide & narrow geographical presence like global & local firms.

· Extent of integration between the activities.

· Inter relationships between activities of relates industries.

E.g. As those between commercial banks & investment banking industries. The activities of an
investment banks depend upon the service provided. The services provided by an investment
bank can be broadly given below:
Figure 2.1
CORE SERVICE PORTFOLIO
Figure 2.2
Issue of Securities, Underwriting & Merchant banking
Investment banks play a vital role in primary market. They are responsible for finding investors
for initial public offering of securities in primary market. By bringing the buyers & sellers
together, they create a market. Such sales can take the form of best offers or agency arrangement.
Best offer activity is resorted to in the case of either new or small companies in whose case of
either new or small companies in whose case underwriting would be risky or established &
popular companies whose issues are enthusiastically received. Investment bankers may also help
as a finder for private placement of securities with institutions. They also purchase new issues
from security issuers & arrange for their resale to the investing public. Investment bankers buy
the new issue at an agreed price & hope to resell it at a higher price. In this capacity they are said
to underwriter, or guarantee, an issue. A group of investment bankers join together to
underwriting syndicate. The commission received by the investment bankers consist of
differential or spread between purchase & resale prices. The underwriting risk would be that the
issue may not attract buyer at positive differential. Investment banks put its effort in managing &
placement of an issue. Investment banks helps in issue by helping in deciding type of security,
size of the issue according to the financial requirement of the issuer. It also helps in deciding
time, pricing of issue which is one of the important aspects of success of the issue. Investment
banks help in listing of issue, issue of prospectus underwriting of issue etc.
The primary market which was quite small in India was revitalized with the abolition of the
Capital Issuers (control) Act 1947 & the passing of the Securities & Exchange Board of India
Act, 1992. The SEBI functions as the regulator for the capital markets similar to its counterpart,
the SEC in USA. SEBI vide its guidelines dated June 11, 1992 introduced free pricing of
securities in public offers for the first time in India. The purpose of this law is to require security
issuers to fully disclose all information that affects the value of their securities. Over the last ten
years, there have been two distinct phases of primary market boom- the first between 1992-1996
& the second between 1998-2001. The third wave of the primary market issuers could be shape
up in near future. This market is very closely regulated by SEBI. In the days when the public
offers market is very vibrant, this area of service forms the main activity for investment banks. In
the past few years, through public offers have been very few, the private placement market,
especially in the debt segment have been very active & has served as an important source of
funds for prime rated corporate. Once the private placement markets also come under regulatory
stipulations, investment banks would have a wider role to play in such issuances.
Mergers & Acquisitions Advisory

The merger & acquisitions industry was pretty nascent in India prior to 1994 & continues to be
tiny compared to the global scale transactions. However, two main factors that given below
given a big push to this industry are:
· The forces of liberalization & globalization that have forced the Indian industry to

consolidate.
· The institutionalisation of corporate acquisitions by SEBI through its guidelines, popularly

known as the Takeover Code.
One of the cream activities of investment banks has always been M&A advisory. The larger
investment banks specialize in M&A as a core activity. While some of them provide pure
advisory services in relation M&A, other valid merchant banking licences from SEBI also
manage the open offers arising out of such corporate events.
The investment bankers play the role of an advisor in M&A deal. The financing capability of the
investment banks is beginning to play a crucial role in securing the goal. Those firms that have
networks with banks & other financial institutions & thereby can provide finance or have
necessary resources to finance the deal themselves a better chance of success of deal. Investment
banks thus helps in finding a buyer/seller, in working out the terms of the transaction, financing
the structure, arranging bridge loans. It is necessary that the M&A group keep a close watch on
the various industries, companies in order to identify the potential M&A candidate. Similarly,
close relationship with the securities research people, traders also help to identify the companies
vulnerable to takeovers. The task of doing M&A deals begins with analyzing & structuring the
transaction. This comprises of analyzing the companies that offer attractive strengthening or
diversification possibilities & then which among these could be purchased. The M&A group will
value the prospect companies & estimate what price will have to be paid to acquire them. Once
the target for the merger or acquisition is identified, the banks would advice the firms on how to
approach for that. Financing is the final aspect in structuring an M&A. The form of financing
includes cash, common stocks, preferred stocks or debt or convertible securities. When these
negotiations reach to a point agreement, the investment banks of the parties must ensure that all
the regulatory & legal aspects of the deal are complied with. Thus investment bankers act as
chain for companies.
Asset Management Services
This is a service provided by investment banks to local fund managers for cross border
settlement & administration. It involves receipt of dividends & interest, subscribing to the right
issues & adjusting portfolio. Asset management is the unglamorous aspect of investment
banking, the prosaic bank office work of settling traders, making payments, keeping records &
such related tasks. Investment banks provide this service for a fee to investors such as mutual
funds, pension fund & insurance companies, enabling fund managers to buy & sell securities at
home & abroad. It is a hi-tech, hi-volume, low margin business, revolutionized by advances in
computer technology & information exchanges.
Asset management services are growing at the rate 15-20%. The primary reason for such growth
is the growing need to diversify beyond domestic markets to reduce risk & boost returns.
Custody fees are based on the value of assets under consideration. This increased competition,
banks fees are falling to levels insufficient to cover operating expenses. This leads to diminishing
interest in custody services. Most of the top financial group in India which investment banking
businesses such as the –ICICI, the IDBI, Kotak Mahindra, DSP Merrill Lynch, JM Morgan
Stanley, SBI also have presence in the asset management business through separate entities. As
per the three structure propounded by SEBI, the parent organization acts as the sponsor of the
fund & the fund itself is constituted as a trust.
Secondary Market Activities
Investment banks also indulge in proprietary trading. Some investment banks have proprietary
trading desks which take risk on of institution’s behalf, based on a view of economic & market
perceptions & expectations. The trader in securities or derivatives for the account of the firm
itself rather than on behalf of it’s clients. Proprietary trader tends to take decisions based on
detailed technical & fundamental research, analytic calculations & time series forecasting. The
banks incur profit out of the price movement in the market. Secondly, as a market maker the
trader investment banks take position in the market through purchase & sale of equities, debt &
other securities, execute the customer orders & manage the customers, institution’s market risk.
Investment banks perform the following functions:-
· The traders of investment banks help in making market. The traders maintain a position in

the stock that their firms has underwritten, quote the bid & ask prices & sell at those price.
· Advise the salespeople, client & research analysts on the market activity & pricing for

different equity issues.
· Put major trades together by negotiating with the salespeople, client & the other dealers.

· Manage the firm’s investment risks.

· Develop a sound knowledge about the markets, companies & the industries. The commonly

traded securities by investment banks include the sovereign securities, equities, money market
instruments, investment grade corporate debt, high yield debt, derivatives, mortgages, etc. Most
of the universal banks such as ICICI & IDBI & Kotak Mahindra have their broking &
distribution firms in both the equity & debt
Investment Banking segments of secondary market. In addition several other investment banks
such ad JM Morgan Stanley, DSP Merrill Lynch have a strong presence in this area of activity.
In the past few years, the derivative segment has been introduced in the Indian capital market &
this provides an additional avenue of specialization for investment banks. Derivative trading, &
risk management & structured product offerings are the new segments that are fast becoming the
areas of future potential for Indian Investment banks. The securities business also provides
extensive research offerings & guidance to investors. The secondary market services cater to the
both the institutional & non- institutional investors.
Full service brokers & Discount brokers
Investment banks act as Full service brokers & Discount brokers.
Ø Full service brokers provide a whole range of services, including giving specific investment
advice. They keep close tracks of the markets & keep the client abreast of opportunities that suit
their objective. They also offer detailed about the client’s financial picture, structure & monitor
the assets, make recommendations about investments & implement the transactions about
investments & implement the transactions as required. A full service brokerage therefore suits
those investors who do not have the time to watch the markets.
Ø Discount brokers are called so because they generally charge lower fees than the full service
brokers do. Investors who like to do their own research & make their own decisions use discount
brokers. Discount brokers offer little or no advice & merely execute the transaction as ordered.
Sales & Distribution
In the present scenario, the financing needs are immense for both corporates & governments,
while the investment managers are constantly on the lookout for optimal allocation of funds for
optimal Returns. The link between the two is filled by investment banks, in particular, by the
sales & Distribution operations. Sales & Distribution bring together the primary issuers &
secondary sellers with the buyer of the instruments. These could be equity, fixed income
instruments. In general, there could be two product categories:
Ø Institutional sales group
Ø Retail segment
· Institutional segment The salespersons at the investment banks have counterparts at the

institutions. These ‘counterparts’ are normally referred to as buy- side analysts or portfolio
managers. If the investment bank’s analyst is respected, they also act as sell-side analyst, as a
part of investment decision.
· Retail segment Investment bank’s act as an advisor to his clients. He is more multi- market

oriented & can recommend stocks as well as bond unlike specialists in the institutional product
group. The success of a salesperson reflects not just in his selling abilities, but also his ability to
fulfill client expectation

Research
The research operations of an investment bank are concerned with studying the economic trends,
industry developments, & individual companies stocks & providing proprietary investment
advice to the institutional clients, & to its sales & trading divisions. The research division is also
an important part of the underwriting process, both in attracting the clients by their knowledge of
clients industry & in providing a critical link to the institutions that own the clients stocks once
the stocks is publicly traded. An efficient research team provides an information advantage to the
investment banks that can use it for in-house trading purpose & also can use for the benefit of
their clients.
Ø Equity Research
The Equity Research division of a securities house or investment bank provides in-depth stock
market analysis & a broad perspective & knowledge regarding the industry trends. They also
provide an insight into the including valuation of quoted companies & evaluation of companies
prospects. The research evaluations usually include:
Ø Industry evaluations, which analyze the trends in the industry, compare the company’s
performance to the industry averages.
Ø Company evaluations that examine the particular company, its financial position, its securities
from an investment perspective & thereby recommend a buy/ hold/ sell decisions.
Ø Technical analysis that focuses on the performance of the securities in the various markets.
Ø Portfolio analysis that helps to manage the client’s investment objective with a suitable
investment program. Like this investment bankers perform equity research service.
Ø Fixed-income research the fixed income research division provides research focus on the
instruments like corporate debt including investment grade debt, high- yield debt, corporate &
portfolio strategy derivatives, mortgage backed securities, asset backed securities. Fixed- income
research is considerably more quantitative than equity research. The analysts in this division
assess the fairness of the spreads between the fixed- income instruments of different maturities &
different risk classes & makes trading recommendations based on the deviations from the fair
spreads, estimate the value of the options in the mortgages & mortgage backed products. The
fixed income research groups work closely with the clients in order to identify their needs &
work to provide customized solutions to the clients.
Institutional investing
Institutional investors have been a recent phenomenon in the Indian capital market, Which till
then had the presence of a handful of public financial institutions such as the & the insurance
companies. The term lending institutions such as the IFCI did not participate in secondary
market dealing as a matter of policy. With the advent of liberalization, there are presently a large
number of domestic institutional investors in the secondary market apart from approved foreign
institutional investors. In addition, institutional investment have risen significantly in the primary
markets through venture capital & private equity investments by investors in both the domestic
& non- resident categories. Several of the leading investment banks either have dedicated
venture funds or private equity funds that invest on primary market through their dealings &
market making activities.
Wealth management services

Wealth management services also called as private banking. Many reputed investment banks
nurture a separate segment to manage the portfolio of high networth individuals, households,
trust, & other type of non- institutional investors. This can be structured either as a pure advisory
services wherein the investment manager does not have any access to the funds or as a fund
management service wherein the investment manager is given charge of funds. In the former
case, it becomes it becomes a non-discretionary portfolio & in the latter case, it becomes a
discretionary portfolio. Such activity is regulated under the guidelines. In other case, wealth
management may be restricted to a research based activity wherein in the investors is a provided
good investment recommendation from time to time.
Corporate Advisory
Investment banks in India also have large practice in corporate advisory services relating to
project financing, corporate restructuring through equity repurchase including management of
buyback offers under section 77A of the Companies Act,1956 raising private equity, structuring
joint- ventures & strategic partnerships & other such value added specialized areas. Several
investment banks have longstanding relationships with government & firms. Their advise is
sought because investment banks are not big traders & distributors of securities or do not have a
commercial parent.
Derivatives
1. Equity and Fixed Income Research
Security analysts are usually assigned to an industry or region. You could be responsible for
making buy or sell recommendations to investors about a stock or bond.

2. Institutional Sales
In institutional sales you would be responsible for conveying information about particular
securities to institutional investors.
CHAPTER III
REGULATORY FRAMEWORK FOR INVESTMENT BANKING
Investment banking in India is regulated in its various facets under separate legislations or
guidance issued under statute. The regulatory powers are also distributed between different
regulators depending upon the constitutions & status of the investment bank. Pure investment
banks which do not presence in the lending or banking business are governed primarily by the
capital market regulator i.e. SEBI. However universal banks & NBFC investment banks are
regulated primarily by the RBI 9in their core business of banking or lending & so far as the
investment banking segment is concerned, they are also regulated by SEBI. An overview of the
regulatory framework is furnished below:-
1. At the constitutional level, all investment banking companies incorporated under the
Companies Act 1956 are governed by the provision of the act.
2. Investment banks that are incorporated under a separate statute such as the SBI or the IDBI are
regulated by their respective statue. IDBI is in the process of being converted into Companies
Act.
3. Universal Banks are regulated by RBI of India under the RBI Act 1934 & the Banking
Regulation Act which put restrictions on the investment banking exposures to be taken by the
banks. The RBI has relaxed the exposure limits for merchant banking subsidiaries of the
commercial banks. Till now, such companies were restricting their exposure to a single entity
through the underwriting business & other fund based commitments such as standby facilities
etc. to 25% of their net owned funds. Therefore these companies are now on par with other
investment banks which can do so upto 20 times their net owned fund.
4. Investment banking companies that are constituted as non-banking financial companies are
regulated operationally by the RBI under Chapter IIIB section 45H & 45QB of the RBI Act,
1934. Under these sections RBI is empowered to issue directions in the area of resources
mobilization, accounts & administrative controls. The following directions have been issued by
the RBI so far:
v Non-Banking Financial Companies Acceptance of Deposits (Reserve Bank) Directions, 1998.
v NBFCs prudential Norms (Reserve Bank) Directions, 1998.
5. Functionally, different aspects of investment banking are regulated under the securities &
Exchange Board of India Act, 1992 & the guidelines & regulations issued under. These are listed
below:
v Merchant banking business consisting of management of public offers is a licensed &
regulated activity under the SEBI Act (Merchant Bankers), 1992.
v Underwriting business is regulated under the SEBI (underwriters) Rules & Regulations, 1993.
v The activity of secondary market operations including stock broking are regulated under the
relevant by-law of the stock exchange & the SEBI (stock broker & sub broker) Rules &
Regulations, 1992. Besides for restricting unethical trading practices, SEBI has issued the SEBI
(Prohibition of fraudulent & unfair trade practices relating to securities markets) Regulations
1995& also SEBI prohibited insider trading under regulations, 1992

v The business of asset management as mutual funds is regulated under the SEBI (Mutual Fund)
Regulations, 1996.
v The business of portfolio management is regulated under the SEBI (Portfolio mangers) Rules
& Regulations, 1993.
v The business of venture capital & private equity by such funds that are incorporated in India is
regulated by the SEBI(venture capital) Regulations,1996 & by those that are incorporated
outside India is regulated under the SEBI ( Foreign venture capital funds) Regulations,2000.
v The business of institutional investing by foreign investment banks & other investors in Indian
Secondary markets is governed by the SEBI (Foreign Institutional Investors) Regulations 1995.
6. Investments banks that are set up in India with foreign direct investment either as joint
ventures with Indian partners or as fully owned subsidiaries of the foreign entities are governed
in respect of the foreign investment by the Foreign Exchange Management Act, 1999& Foreign
Exchange Management (Transfer or issue of a person resident outside India) Regulations 2000
issued there under as amended from time to time through circulars issued by the RBI.
7. Apart from the above specific regulations relating to investment banking, investment banks
are also governed by the other laws applicable to all other underwriting support on government
securities issue & participate in auctions held by the RBI.
SKILLS SUGGESTED FOR INVESTMENT BANKERS
1. T
echnical Skill
Ø Academic Background - In the early days of investment banking, not much importance was
attached to academic background. Today, the business has become very complicated and the
skill requirements have multiplied. Consequently, investment banks find it important to recruit
people with the right academic credentials. Typically, for most of the important jobs, an MBA is
a must. Investment banks rely heavily on campus recruitments
Ø Conceptual Soundness - One of the major benefits for a professional in an investment bank is
the learning associated with work. The financial skills of an expert are tested to the core while
handling a complicated deal. Comprehensive and in-depth knowledge of financial and business
concepts are essential to sustain business. Multiple relationships between various factors render
decision-making difficult. Financial solutions can be provided to the clients only when the
advisor is competent to understand all or at least a majority of them. Before practical solutions
emerge, the tools for decision-making will give greater choice to the solution provider. A strong
grounding in theory and concepts facilitates this.
Ø Product Specialization - One way to specialize in an investment bank is through products. An
expert in a particular product, say hybrid instruments, can work out financial solutions for any
client across the industries. Each client has his or her individual risk taking ability. To cater to
the client on an in basis, appropriate products that would suit their risk profile should be
identified. The clients will also feel at home while dealing with a product specialist.
Ø Legal Knowledge - While clear cut guidelines can be issued to the traders regarding their
market related activities that are governed by the law, the complexity multiplies for an M&A
deal. The regulators’ guidelines have to be strictly followed, even while envisaging a
combination. Legal knowledge is also important for structuring such deals, which will help
identify the constraints associated with proposed solution. The situation gets more intense when
the deal is a cross-border M&A proposal. Apart from the knowledge of the inland laws, foreign
laws also have to be considered. Any regulation by the foreign government can make an
otherwise desirable deal, unviable.
Ø Knowledge of Capital Markets and Functioning - More than any other industry, it is the
investment banking industry that has a direct bearing on the way capital markets function. Any
changes in the capital market regulations affect the brokerage side of the business, along with the
trade clearing and settlement houses. The trading personnel should be conversant with the
regulations, guidelines, procedural formalities and actual trade execution processes involved in
capital market. E.g. Trading system involves a lot of additional skills than online trading. He has
to be conversant with the codes, symbols and conventions followed by the market. Quick
signaling and accurate interpretation are of utmost significance. Any mistake in these would lead
to faulty execution of orders and might entail additional costs to the firm in correcting the errors.
Ø Knowledge of Regulatory Bodies involved in the Various Operations - It is necessary for an
investment banker to be aware of all the regulatory bodies that govern the activities in which
he/she is involved. A thorough knowledge of all such bodies is absolutely essential to perform
extraordinarily. In India, the SEBI & central bank acts as a watchdog and regulator of market
related activities.
Ø Knowledge of International Business Scenario and Economic Trends -Though a researcher is
primarily involved in economic and business cycle studies, it is the duty of all the investment
bankers to have a general overview of these affairs. Salespersons, who also act as financial
consultants/advisors, should essentially be aware with economic and business cycles, lest they
lose the respect and trust of the client. The requirement for global perspective and international
exposure is becoming increasingly important. The firm should offer services across the national
borders to the corporate clients and informed services are possible only when the employee is
well- equipped with international business information.
Ø Knowledge of Software Tools, Developments in the Field of Information Technology - One of
the most important technical skills is the usage of computers, tools and internet technologies.
Marketing, brokerage, research and capital mobilization have all undergone sweeping changes
owing to technology. The securities trader has changed into a tech-savvy professional, executing
online orders & maintaining databases. The technology helps management and other
departmental professionals and even the clients to disseminate such data in negligible time. Asset
managers have now complicated tools for scientific and in-depth valuation of portfolios. Comp
frameworks can be solved with minimum effort using technology.
§ Communication Skills
Ø Ability to Cater to the Audience According to its Awareness Levels - Communication skills
include both the means of communication — written and oral. However, the audiences vary
extensively, and hence, the requisite communication skills also differ widely. A marketer
handling individual investors will necessarily have to keep the content very simple and express t
in layman’s terms. Usage of financial terms & jargons will not fetch results. Cash flows, the
characteristics of the instruments & the risk class to which the investment belongs to must be
explained in simple & easily understandable terms.
Ø Negotiation Skills - Negotiation skills is important at a variety of places. Institutional clients
have to be convinced about the prospects of the investments that are solicited by the firm.
Investors in syndicated debt must be satisfied with the payment streams and interest rate terms.
M&A transactions are the toughest assignments for negotiations. Even a friendly transaction
would be difficult if not for patient and mutually negotiations. The common issues that pertain to
negotiation are — terms of offer, offer price, post merger integration, organization and reporting
structure, business lines to be developed above all dealing with the overlapping functions. While
negotiating, the banker should always keep the prime object in the mind & quickly evaluate the
various counter offers & suggestions made by other party.
Ø Personality Traits - Personality Traits plays an important role in developing the skill set of an
investment banker. Creativity is an important feature. It comes in use while handling prospectus,
clients & team members. It is essential when solutions are to be identified for complex problem.
Innovations & creativity are required structure deals.
§ Other Skills
Ø Marketing Skills - The marketing skills would be an application of skills mentioned above.
One of the important marketing skill would be relationship management. Unlike most other
industries where relationship plays a facilitating role in conducting business, it is fundamental
issue in the investment banking industry. An attitude for creating, establishing & maintaining
relationships, during boom & down period, is of utmost importance in getting mandates.
Ø Inter-Personal Skills -Inter-personal skills are basically blended from communication skills,
and personality traits. They include interactions with superiors, subordinates, colleagues, clients,
competitors, team members and even politicians and public office bearers. Inter-personal skills
come to the fore during team exercises where diplomacy and manners become essential. Team
exercises can also include dealing with members from other departments or even with other
firms. Such situations call for greater application of team skills and an element of mutual respect
towards each other.
Ø Networking Skills - Networking refers to the process of developing a web of contacts and
acquaintances. Some of the special attributes required to develop networking abilities would
include:
• Knowledge of human psychology;

• Presence of mind to apply the appropriate skills as situation demands;

• Approaching through proper channels that would lend credibility respectability to contacts;

• Persuasion skills;

Role of Investment Banking Companies in India:
Ø Investment banking companies generally help their clients to access capital through equity,
debt and other kinds of investment products. These firms also trade in equities and derivative
products and also help companies with merger and acquisition deals.
Ø A
bout a couple of years back, when the world economy was reeling under a recession, many
investment banking firms either collapsed or were on the brink of closure. Even a few firms in
India were affected by this global downturn. This led to many skeptics writing off the revival of
these firms.
TYPES OF PLAYERS IN INVESTMENT BANKING
Full-Service Firms :-
These are type of investment banks who have significant presence in all areas like underwriting,
distribution, M&A, brokerage, structured instruments, asset management etc. They are all
rounder 0f the game.
Commercial Banks :-
Commercial Banks operating through “Section 20” subsidiaries referring to the subsidiaries
formed under section 20 of the Glass- Steagall Act which were allowed to carry on limited
investment banking services.
Boutique Firms :-
These are the type of players which specialist in particular areas of investment banking.
Brokerage Firms :-
These firms offers only trading services to retail & institutional clients. They have huge investor
base which is also used by underwriters to place issues. Asset Management
Firms :-
These firms offer on investment services. This includes activities like fund management, wealth
management, cash management, portfolio management depending on the type of investors,
tenure of corpus, purpose of investments, type of instrument invested in etc.
List of major investment bank
tment banks in the world tment bank in India

ays Capital I Securities
kstone Group it Corp Finance
C Capital Markets
roup k Mahindra
it Suisse m
sche Bank ill Lynch
core Partners C (Blr)
man Sachs sche Bank (Delhi, Bangalore , Mumbai )
C gan Stanley (Mumbai))
organ
rd man Bros
is & Co man Sache
gan Stanley (Hyd & Mumbai)
o Securities organ (Mumbai & Bangalore
of America nce Money
ill lynch
Table 3
SCOPE
Scope for growth of Investment Banking in India as planning and industrial policy of the country
envisaged the setting of up of new industries and technology, greater financial sophistication and
financial services are required. There is a well proven link between economic growth and
financial technology. Economic development requires specialist financial skills: savings banks to
marshal individual savings; finance companies for consumer lending and mortgage finance;
insurance companies for life and property cover; agricultural banks for rural development; and a
range of specialized government or government sponsored institutions. As new units have been
set up and business is expanding, they require additional financial services. A public equity or
debt issue is the logical source of fund in this situation and investment banks can tap this
opportunity of growth. The areas of great scope could be,
Growth of Primary market:
If the primary market grows and number of issues increases, the scope of investment banking
will be enhanced.
Entry of Foreign Investors:
Now India capital market directly taps foreign capital through euro issues. FDI is increased in
capital market. So investment bankers are required to advice them for their investment in India.
The increasing number of joint ventures also requires expert services of investment Bankers. If
more and more NRIs participate in capital market, there will be great demand for investment
banker services.
Changing policy of Financial Institutions:
Now the lending policies of financial institutions are based on project orientation, so the
investment banker services will be needed by corporate enterprise to provide expert guidance.
Development of debt markets:
If the debt market is enhanced, there will be tremendous scope for investment bankers. Now
NSE and OTCEI are planned to raise their fund through debt instruments.
Corporate restructuring:
Due to liberalization and globalization Companies are facing lot of competition. In order to
compete, they have to go for restructuring, merger, acquisitions or disinvestments. They may
offer good opportunities to merchant bankers
The scope could be extended to:
1. Advising the company on designing of its Capital Structure.
2. Advising the company on the instrument to be offered to the public.
3. Pricing of the instrument.
4. Advising the company on Legal/ regulatory matters and interaction with SEBI/ROC/ Stock
Exchanges and other regulatory authorities.
5. Assisting the company in marketing the issue.
6. In channelizing the financial surplus of the general public into productive investment avenues.
7. To coordinate the activities of various intermediaries to the share issue such as the registrar,
bankers, advertising agency, printers, underwriters, brokers etc.
8. To ensure the compliance with rules and regulations governing the securities market
Challenges:
Investment banking is one of the most global industries and is hence continuously challenged to
respond to new developments and innovation in the global financial markets. Throughout the
history of investment banking, it is only known that many have theorized that all investment
banking products and services would be commoditized. New products with higher margins are
constantly invented and manufactured by bankers in hopes of winning over clients and
developing trading know-how in new markets. However, since these can usually not be patented
or copyrighted, they are very often copied quickly by competing banks, pushing down trading
margins.
For example, trading bonds and equities for customers is now a commodity business structuring
and trading derivatives retains higher margins in good times - and the risk of large losses in
difficult market conditions, such as the credit crunch that begin in 2007. Each over-the-counter
contract has to be uniquely structured and could involve complex pay-off and risk profiles.
In addition, while many products have been commoditized, an increasing amount of profit within
investment banks has come from proprietary trading, where size creates a positive network
benefit. The fastest growing segments of the investment banking industry are private investments
into public companies. Such transactions are privately negotiated between companies and
accredited investors.
POTENTIAL FOR INVESTMENT BANKING IN INDIA
The bane of Indian capital market today is lack of investor confidence. This is reflected in the
poor performance of both primary & secondary markets. The causes for existing situation are
many but primarily arise on account of lack of liquidity, unscrupulous issuers & merchant
bankers & poor or unappraised issues. Investment banking can solve this problem because
investor would be dealing with reputed investment banker in the primary market rather than
unknown issuers. The investment banks whatever be their issue management techniques have
their own capital on hold. The issues are likely to be properly appraised & priced & sponsors on
OTCEI have a two year lock-in period. Similarly investment banks would hold the issues until
market conditions are appropriate for issue, thus reducing the risk exposure of investors in
gestation for issue. Moreover, the price of reissue will be a better indicator of issue’s
performance. Investment banks make the primary market subscription. In sum, the quality of
pricing, appraisal, & primary market functions will improve resulting in substantial improvement
in investor confidence. Since the investment banker lends its name to the issue it will imply an
issue investors can trust. Investment bankers may gradually replace merchant bankers in India.
THE FACTORS ON WHICH GROWTH OF INVESTMENT BANKING DEPENDS:
1. Planning and industrial policy of the country i.e. India in this case
2. Prevailing Economic condition of the country
3. Regulatory system of the market and economy prevailing in India
4. Confidence of the people, traders, buyers, marketers, business houses, financial institutions etc
5. The economic environment of the outside world.
6. Competition among the existing players and the upcoming entrant
ENVIRONMENTAL SCANNING
‘PEST ANALYSIS’ OF INDIAN INVESTMENT BANKING INDUSTRY

Figure 3.2
SWOT ANALYSIS
Strengths: -
a) Breadth of Financial Services Offerings: investment banking provides various types of
services such as trading, private equity, venture capital, M&A, joint venture, and project finance
etc.
b) Proficient Employees: the major strength of any sector is its employees. In investment
banking all the workings are done by professionals because it requires deft and proficient
personnel.
c)Technological Advancement: Due to technical advancement, working efficiency has been
increased and works are done quickly and easily.
d) Advance Infrastructure: The country is equipped with all the latest and advances amenities
such as better telecommunication, transportation, potable water, internet, land etc.
Weaknesses:
a) Unawareness of Investors: the major weakness is the unawareness of its services among
investors, due to which after 40 years of odyssey it could not reach to the level where It should
have been.
b) Excessive Dependence on Trading Sectors: As per the data collected by the team and
experiences shared by Sr. managers, it is quite apparent that investors are more dependent on the
trading sector for their investments rather than any other field.
Opportunities: -
a) Growing demand for Investment Banking: The knowledge of investment banking is increasing
among investors and they are diversifying their investment into many sectors besides trading. It
can be seen by looking at the number of mergers and acquisitions, various projects in the
countries and the level of Sensex in the country.
b) Removal of International Trade Barrier: 1991 reform policy and recent amendments in
international trade have widened the area and scope of investment banking in India.
c) Financially Attractive Country: India is a financially attractive country. Recent experience of
‘Recession’ shows that, India is among the few countries (China, Brazil and India) who not only
survived in this difficult era but shows the path to developed countries to overcome this calamity.
Threats: -
a) Increasing competition: competition in investment banking is increasing day by day. New
players are foraying to the market due to this market share of each existing company is getting
affected and profit as well.
b) Decentralized management: each branch manager in a company is given the authority of
taking decisions in their respective branches. The decisions made by different managers are
diverse and any wrong decision may lead to heavy losses to the company.
ROLE OF INVESTMENT BANKERS IN DEVELOPING AN ECONOMY
Figure 3.3
EXPLANATION
1) Investors:
Investors are the persons who generate savings. The investors who generate savings will
definitely like to earn something out of it rather keeping the funds idol. So the question of
investment arises and with the investment risks arises. So for proper and safe deployment of
funds investment bankers help them in the process of investing their funds.
2) Role of investment bankers:
The investment bankers act as an intermediary between the investors and capital market which
consists of primary market and secondary market. The investment bankers with their intense
research guide them to invest their money in banks/FI, Capital and money market, foreign
exchange market, commodity market, real estate/gold etc. Proper deployment of funds will help
the investors to earn good returns with safety of their initial invested funds.
3) Business Activity:
All these investments from the investors will lead to business activity in different sectors. The
funds deployed by the investors will be utilized by the users of the deployed funds will lead
production of goods and services in the economy.
4) Twin Advantage:
The investors will not only earn returns, capital appreciation etc but also they will utilize the
goods and services produced by the users of the deployed funds. This will in return create
satisfaction in the minds of consumer/investor and will also earn profits for the user of the funds
because of utilization of goods and services. This will be a win-win factor and also will develop
the economy as a whole.
CHAPTER IV
PRIMARY DATA
I have collected my primary data through interviews. I have interviewed two subjects, the first
being an ex- employee of George Soros Investment Firm, and othe is the branch manager of
ICICI bank. I have asked the subjects a series of questions relalting to investment banks and the
future they hold in India.

QUESTIONNAIRE
1. What are the services offered by Investment banks? Do their operations in India differ
from their operations globally?
2. How are Investment banks different from Commercial banks?
3. What forms a major part of the business of Investment banks?
4. How do Investment banks earn their profits?
5. What do you think is role of Investment banks in the future of the Indian economy?
6. Who would you classify as the main clients Investment banks?
7. What are the main types of regulations that Investment banks have to deal with? How are
they different from other countries?
8. Which country has the most liberal regulations for Investment banks? Can those
regulations be replicated in India?
ANALYSING PRIMARY DATA
After conducting the interviews, I have processed and clubbed all the data together for an
in-depth and more accurate analysis.
Investment banks have huge avenue for expansion in India, and they have been doing so over the
past couple of years. India is one of the main countries in which Investment banks invest they
funds and resources. The main reason being is that India has a huge population, which leaves a
lot of untapped potential in many parts of the country for Investment banks to capitalise on. Also
India is in a major growth phase and will be for around the next 5 years , that is why you see
many global brands coming to India these days, it is because they too realise the potential of the
Indian markets.
But why do Investment banks favour India over countries like Pakistan, Nepal, Bangladesh and
other developing nations? It is because our government provides a more stable political
evironment for these MNC's to develop, while providing a lesser risk to them.
Eg:- Only 20% of India's population owns cars while the remaining 80% doesn't, this leaves a
huge opportunity for growth in the automobile industry, which Investment banks would prefer to
invest in.
Having fixed laws and policies in our country also makes it desirable to investors as this gives
them a degree of certainty, which is one the factors which is used for calculating the risk of a
project.
Everyday we see new technology entering the Indian market, like 3G/4G, mobile phones, cars,
etc. all of this made possible through the funds proccured through investment banks.
Investment banks and firms like to invest in several ventures like:
· Infrastructure

· Venture Funds

· Equity Debt Markets

· Information technology

· Dot-com Companies

· Small Scale and Large Scale Industries

· Manufacturing uits

But everything isn’t a simple walk in the park for investment banks, they still have to adhere to
the strict guidelines set by the governing bodies; SEBI, RBI & FEMA.
In India while conducting a transaction, several procedures need to be followed and several
forms of id proof is required (PAN, Adhaar card, Driving License,etc.), this can at times be a
very hassling process. Whereas is countries like U.S. and U.K. all the documents required for
conducting a transaction is a driving license. While in Middle East countries no documents are
required, the cash on the spot is required.
Therefore many investment firms prefer other countries rules and regulations as they cause less
hassels. Unfortunately those same regulations are not possible to enforce in India, because India
is such a large country with so many people its difficult to keep track of everything and there are
bound to be a few things that slip through the cracks.
CASE -STUDY
INTRODUCTION
Kotak Securities Ltd., is India's leading stock broking house with a market share of around 8%.
Kotak Securities Ltd. has been the largest in IPO distribution.
The accolades that Kotak Securities has been graced which include:
Prime Ranking Award (2003-04) - Largest Distributor of IPO's
Finance Asia Award (2004) - India's best Equity House
Finance Asia Award (2005)-Best Broker In India

The company has a full-fledged research division involved in Macro Economic studies, Scrotal
research and Company Specific Equity Research combined with a strong and well networked
sales force which helps deliver current and up to date market information and news.
Kotak Securities Ltd is also a depository participant with National Securities Depository Limited
(NSDL) and Central Depository Services Limited (CDSL), providing dual benefit services
wherein the investors can use the brokerage services of the company for executing the
transactions and the depository services for settling them.
Kotak Securities has 122 branches servicing more than 1, 70,000 customers and coverage of 187
cities. Kotaksecurities.com, the online division of Kotak Securities Limited offers Internet
Broking services and also online IPO and Mutual Fund Investments. Kotak Securities Limited
manages assets over 2500 crores of Assets under Management (AUM). The portfolio
Management Services provide top class service, catering to the high end of the market. Portfolio
Management from Kotak Securities comes as an answer to those who would like to grow
exponentially on the crest of the stock market, with the backing of an expert.
AREA OF BUSINESS FOR KOTAK SECURITIES
Kotak Securities has five main areas of business:
§ Institutional Business
This division primarily covers secondary market broking. It caters to the needs of foreign and
Indian institutional investors in Indian equities (both local shares and GDRs). The division also
incorporates a comprehensive research cell with sectoral analysts who cover all the major areas
of the Indian economy.

§ Private Client Services
Private Client Services (PCS) is a special investment division for High Net-worth individuals,
retail investors, Non-Resident Indian investors, trusts, corporates and banks. The investment
product range at PCS is among the widest in the country and covers debt and equity, mutual
funds and specialised structured investment products.
§ Client Money Management
This division provides professional portfolio management services to high net-worth
individuals, retail investors, and corporates. Its expertise in research and stock broking gives the
Company the right perspective from which to provide its clients with investment advisory
services.
§ Retail distribution of financial products
Kotak Securities has a comprehensive retail distribution network, comprising approximately
7000 agents, 13 branches and over 20 franchisees across India. This network is used for the
distribution and placement of a range of financial products that includes company fixed deposits,
mutual funds, Initial Public Offerings, secondary debt and equity and small savings schemes.
§ Depository Services
Kotak Securities is a depository participant with the National Securities Depository Limited and
Central Depository Services (India) Limited for trading and settlement of dematerialized shares.
Since it is also in the broking business, investors who use its depository services get a dual
benefit. They are able to use its brokerage services to execute transactions and its depository
services to settle these.
PRODUCTS OF KOTAK SECURITIES

Once you invest with Kotak Securities, you can enjoy access to a wide range of products and
services to help you make the most of your investments.
Easy Equity: Want your capital to appreciate fast? Invest in Easy Equity.
a) Sms Alerts
b) Call & Trade
c) Top Gainers and Losers notification
d) Super multiple
e) Portfolio Tracker
Easy Derivatives: The higher your risk, the greater the returns on your investments.
a) Put Call ratios
b) Top value traded
c) Open interest
d) Stock future/Stock options
Easy IPO: Invest early for greater returns.
a) Forthcoming issues
b) New listings
c) Call & Trade
d) IPO news
e) Open issues
Easy Mutual Fund: Looking to diversify your risk? Invest in Easy Mutual Fund.
a) Find out NAV of a Scheme

b) View Scheme details
c) Mutual fund News
d) Compare Schemes
e) My portfolio
Easy Insurance: Secure your future and your family’s. There’s more to insurance than just
security.
a) How does the plan work?
b) Advantages of the plans
c) Eligibility
d) Other Benefits
ACCOUNT TYPES
The first question in an individuals mind where to open an account Want to start investing? Open
an investing account with KOTAK SECURITIES and begin right away. Whether you are a
beginner or an expert trader, they have different accounts to suit your needs:
Kotak Gateway Account:
If you are new to trading, Kotak Securities opens the gateway to a world of investing
opportunities for you - online and on-phone. Their in-depth research will guide you in making
smart investment decisions. Open the Kotak Securities Gateway Account and get started.
Your Benefits:
Ø Kotak Securities Knowledge Center that helps you learns more about stock markets and
investments.
Ø Enjoy higher returns by investing early - through Easy IPO.

Ø Research Reports on the economy, select industries and companies help you make informed
investment decisions while dealing in Easy Equity.
Ø Research advice via Kotak Securities SMS alerts, so you don't miss out on important buying
and selling opportunities. ⇒ Buy and sell stocks on phone using Call & Trade.
Ø Access to 14 top-performing mutual funds through Easy Mutual Fund.
Ø Free news and market updates.
Ø Exposure of upto 15 times your initial margin on select stocks with Super Multiple.
How to activate?
You can activate Kotak Securities Gateway with any amount between Rs 20,000 to 5,00,000/- as
margin. This can be in form of cash deposit or the value of the shares you buy.
Open your account:
Step 1: To open your account, simply download and print an application form, fill it in and post
it along with the essential documents to the address as mentioned in the form. You can call them
and they will have their representative meet you and help you open the account You can also
email them at gateway@kotaksecurities.com. Their representative will get in touch with you.
Step 2: They will inform you as soon as your account is activated, and you can start trading
instantly
Ø This procedure is common for all accounts.
Kotak Value Account:
Becoming a wise investor requires a good deal of research and education. You must learn not
only how stocks and mutual funds work, but also to make your own investment decisions. The
Kotak Securities Value Account is specially equipped to make investing simpler for you.
Your benefits:
Ø Kotak Securities Knowledge Center that helps you learn more about stock markets and
investments.
Ø Their Research Reports on the economy, select industries and companies help you make
informed investment decisions while dealing in Easy Equity.
Ø Buy and sell stocks on phone using Call & Trade. ⇒ Invest in IPO’s with Easy IPO.
Ø Access to 14 top-performing mutual funds through Easy Mutual Funds.
Ø Research advice via Kotak Securities SMS alerts, so you don't miss out on important market
movements.
Ø The facility to trade in amounts 5 times greater than your capital.
Ø Lower delayed payment interest.
Ø Access to K.E.A.T Desktop - specialised financial software that makes trading easier.
Ø Exposure of upto 15 times your initial margin on select stocks with Super Multiple
How to activate?
You can activate Kotak Securities Value with any amount between Rs. 5, 00,000/- and Rs. 10,
00,000/- as margin. This can be in form of cash deposit or the value of the shares you would
have currently.
Kotak Privilege Circle Account

Kotak Securities offer you nothing but the best. At Kotak Securities, they make sure you get to
enjoy premier and top-line trading services - with Kotak Securities Privilege Circle Your
benefits:
Ø A dedicated Privilege Circle customer service desk offers you assistance in opening accounts,
handling day-to-day problems, and more.
Ø Independent market expertise and support through a dedicated relationship manager.
Ø Place orders phone through Call & Trade.
Ø Access to Easy IPO and 14 top-performing mutual funds through Easy Mutual Funds.
Ø Their Research Reports on the economy, select industries and companies.
movements.
Ø 6 times exposure on the margin.
Ø Access to K.E.A.T Premium - an exclusive premium analysis tool with 52 Indicators for
Technical Analysis, Derivative Chains, Multiple Watchlists, and more.
Ø Lowest delayed payment interest.
Ø Exposure of upto 15 times your initial margin on select stocks with Super Multiple
How to activate?
You can activate Kotak Securities Privilege Circle with any amount more than Rs.10,00,000/- as
margin, by way of cash or stock
Kotak High Trader Account:

For daily traders, they have the Kotak Securities High Trader exposure - an account specially
designed for intra-day traders. This is an Auto Square Off product where you can enjoy the
benefits of intra-day trading. All open orders will be automatically squared off at 3.10 pm.
Your benefits:
Ø Access to KEAT Premium - an exclusive analysis tool with 52 Indicators for Technical
Analysis, Derivative Chains, Multiple Watchlists, and more.
Ø Intra day calls from our experts for a nominal fee.
Ø Their Research Reports on the economy, select industries and companies.
movements.
Ø Place a paper-free order for IPO, through Easy IPO.
How to activate?
You can activate Kotak Securities High Trader with any amount less than Rs 5, 00,000/- as
margin, by way of cash or stock.
Kotak Freeway Account:

Trading unlimited! Kotak Securities Freeway enables you to trade as many times as you like - at
a fixed brokerage. Just pay a fixed brokerage of Rs. 999/- a month and trade as many times as
you want
Your benefits:
Ø Intra day calls from our experts for a nominal fee.
Ø Their Research Reports on the economy, select industries and sectors and companies.
movements.
Ø Place a paper-free order for IPO, through Easy IPO.
How to activate?
You can activate Kotak Securities Freeway with any amount less than Rs. 1, 25,000/- as margin,
by way of cash or stock.
PLANNING WITH KOTAK
Why you need to plan?
When it comes to important life goals it is important to develop a financial roadmap to move
your goals forward and to help you make the most of life's changes.
You need to plan to protect yourself and your family against financial risks. Sure, no financial
planner can protect you from the risks you face in life. But good financial planning can protect
you from suffering the financial loss that may result when any of those risks become reality.
Step 1: Sound financial planning can help you chart a clear course to your retirement goals. So
no matter whether you're just starting out or approaching the end of your career, Kotak Securities
provides you with comprehensive planning and support.
Step 2: Plan taxes as ongoing process and not a one-time event. Good planning will increase
your after-tax cash flows, and may mean greater savings during tax time.
Step 3: Make your money work smarter and harder. Get higher returns from your investments.
Here's how.
Say if you were to invest Rs. 100. Tax-saving schemes like Post Office Schemes, Mutual Funds
and Government Bonds are safe and long-term avenues. Fixed Deposits also give you a 5.5%*
interest, while the share market brings you returns of 18.88%#.
PORTFOLIO MANAGEMENT
Why Portfolio management?
As you drive towards your objective of creating wealth, you need to employ the right investment
vehicles, at the right time. Given the unpredictable nature of equity markets, staying on course
requires expert maneuvering, time and effort.
That's where Portfolio Management comes in. It gives your portfolio the edge by skillfully
sifting through available investment opportunities to help you reduce risk and maximize your
returns; even as you are left with ample time to focus on more pressing matters.
Benefits of Portfolio management with Kotak

Kotak Portfolio Management lets you effortlessly build and maintain a safe and healthy
investment, providing you with multiple benefits.
Count on experience
Their Portfolio Managers bring 10 years of experience to the table, with an in-depth
understanding of diverse investment instruments.
Stay in the loop
Through quarterly account performance statements, delivered to your doorstep.
Go digital, stay updated
They e-mail all your financial statements to you, doing away with the hassle of paperwork.
When in doubt, just ask KOTAK SECURITIES have a dedicated website and a customer service
desk to address all your queries, anytime.
REASEARCH OF KOTAK SECURITIES
Kotak Securities Research Center
Welcome to the Kotak Securities Research Center - the special research cell where some of
India's finest financial analysts bring you intensive research reports on how the stock market is
faring, when is the right time to invest, when to execute your order and more. Depending on
what kind of investor you are, they bring you fundamental or basic research and technical
research. As an investor with Kotak Securities, you get access to these research reports
exclusively. You get access to the following reports.

Intraday calls:
These calls are provided according to changing market situations. Be it news, momentum or
technical perspectives; be updated with what our experts advise you to do during the market
hours.
Special Report:
These reports give you an in depth coverage on special events such as the Budget Report,
Quarterly results, RBI Credit & Monetary Policy, Monsoon Report and much more.
Market Morning:
A technical view summarizing the previous day movement and what is expected to happen on
the current day. This report will also provide you with technical calls for trading along with
various supports and resistances of chosen stocks.
Daily
Morning Brief:
A report providing you information with fundamentally researched stocks everyday. You also
have information on all daily economic, political and various other factors which affect the
fundamentals of a company.
Weekly Technical Analysis:
This Weekly Technical Analysis brings you a complete round up of the week gone by -
recommendations, major supports and resistances, what to look forward to and more. Sectoral
Reports:
Deciding which sector to invest in? Their Super Sector report can guide you. Know details
including the effect of government policies and regulations and estimates about how the sector is
expected to behave.
Stock Ideas:
Ever wanted to pick a needle from a stack of Hay. That's exactly what a stock Idea is. Their
research desk picks out potential stocks which can provide immense scope for returns on
investments. This is a report which is completely based on fundamentals.
Derivative Reports:
You can view the put call ratio, the most active derivative contracts and the top change in open
interest. You can also get FII Statistics, the top gainers and losers and the cost of carrying out
various derivative contracts.
Portfolio Advice:
You can avail the advice of our experts by simply writing an email to them. Whether it is on
choosing a stock or sector or anything regarding investments all your queries will be answered. If
you need advise simply.
Kotak Securities SMS Alerts:
And last, but not the least, you can get these expert tips and recommendations as SMS on to your
mobile phone.
Kotak Securities Research Advantage:
Check out the returns on investments that our clientele has enjoyed over the past year.
MUTUAL FUND RESEARCH
Mutual Fund Research
When you decide to invest in a Mutual Fund, selecting from hundreds of Mutual Funds can get
tough. With Mutual Fund Research, you can take your pick easily - from equity-based or
debt-based funds, to growth funds or dividend-based funds.
Quick Research for investments
Get access to in-depth research. Or zero in from our concise list of funds, stocks and bonds
based on your preferred criteria.
Analyse with in-depth research
Get independent research with reports, ratings, and rankings from expert analysts; plus, insight
into current analyst recommendations and their historical performance.
Monitor your investments
Get breaking news and set alerts for your portfolio, and track performance with watch lists
INVESTING WITH KOTAK SECURITIES
At Kotak Securities, this is precisely what they believe in. They are committed to make trade
easy for you. They understand your level of expertise in trading and provide you solutions to fit
your needs - whether you are a beginner, a seasoned investor or a professional trader. They can
help you invest wisely while taking into account, the amount you wish to invest. Kotak
Securities conducts research for all class of customers.

Beginners
Looking to invest but don't know where and how? Wondering whether online trading would be a
good and reliable way to invest? At Kotak Securities, they make online investing really easy for
you - so you can trade from the comfort of your home or office, or even while you are on the
move.
Seasoned Investors
Given the volatile nature of the stock markets, you can never be really sure of getting stable
returns every time, from your investments. If you have a family to look after, the need for
planning your investments in the long run becomes greater than ever. So whatever you’re life
goals, investing wisely could make all the difference between a fortune gained and an earning
lost. Kotak Securities, help you plan investments keeping your future in mind.
Super Trader
If the research for beginners and seasoned are taken care of by them, super traders—having a
huge volume of transactions, who are dedicated customers, research is conducted to maximize
their returns with minimizing risks.
MARKET SURVEY FOR KOTAK SECURITIES
1) Are you familiar with Kotak Securities?
Yes No
2) Do you have an account with Kotak Securities? If No, Than please Specify?
Kotak HDFC ICICI Others
3) Are you satisfied with the services provided by Kotak securities?
Yes No
4) How do you find the portfolio management services of Kotak securities? Rate on the scale
below Between 1-5 (1– Good, 5– Worst)
1 2 3 4 5
5) Which facility of Kotak Securities do you appreciate the most?
Easy Equity Easy Derivatives Easy IPO
Easy Mutual Fund Easy Insurance
6) How do you find the customer relationship management of Kotak? Rate it on the scale below?
Between 1-5 (1– Good, 5– Worst)
1 2 3 4 5
7) How do you find follow up services of Kotak securities in terms of Monthly reports and
others? Rate it on the scale below between 1- 5? (1– Good, 5– Worst)
1 2 3 4 5
8) Any limitations to Kotak Securities?

MARKET SURVEY RESULT FOR KOTAK SECURITIES.
1) Are you familiar with Kotak Securities? Kotak Securities
Total No. of Persons Yes (%) No (%)
50 90 10
Table 4.1
Figure 4.2
2) Do you have an account with Kotak Securities? If No, Than please Specify?
Total No. of Kotak (%) HDFC (%) ICICI (%) Others (%)
Persons
40 40 25 20 15
Table 4.3
Figure 4.4
Figure 4.5
3) Are you satisfied with the services provided by Kotak securities?
Total No. of Persons Yes (%) No (%)
40 62 38
Table 4.6
Figure 4.7
4) How do you find the portfolio management services of Kotak securities? How do you rate on
the scale below? (1– Good, 5– Worst)
Total No of 1 (%) 2(%) 3 (%) 4 (%) 5 (%)
Persons
40 44 23 15 11 7
Table 4.8
Figure 4.9
5) Which facility of Kotak Securities do you appreciate the most?
Total Easy Equity Easy IPO Easy Easy Mutual Easy
Persons Derivatives Fund Insurance

40 34 13 33 13 7
Table 4.10
Figure 4.11
6) How do you find the customer relationship management of Kotak? Rate it on the scale below?
(1– Good, 5– Worst)
Total Persons 1 (%) 2 (%) 3 (%) 4 (%) 5 (%)
40 31 27 17 13 12
Table 4.12
Figure 4.13
7) How do you find follow up services of Kotak securities in terms of Monthly reports and
others? Rate it on the scale below? (1– Good, 5– Worst)
Total Persons 1 (%) 2 (%) 3 (%) 4 (%) 5 (%)
40 40 27 10 13 10
Table 4.14
Figure 4.15
8) Any limitations to Kotak Securities?
Limitations
After conducting the survey the limitations quoted were as follows:

1) Lack of Branches or Franchisee for trading purpose.
2) Telephonic transactions are at times difficult.
3) Difficulty in internet trading sometimes due to technical problem in loading of sites.
4) No proper marketing strategy.
Note: Percentage rounded off to nearest figures.
Recommendations
After studying the working of Kotak Securities for Non-Institutional investors (Investment
Banking for general public) and taking into account the survey report they should further
improve the quality of services provided by them in regards with transaction statement and the
other limitations which are quoted by the public.
Kotak securities should increase their network of branches according to customer database and
also area wise. It should be done gradually as it requires lots of capital and it should also not
affect the company as a whole.
If the above recommendations are put into action by Kotak Securities, it will improve its
profitability and goodwill of the company along with customer satisfaction.
CONCLUSION
The future of investment banking industry as a whole looks bright. Many more pure merchant
banks & advisory firms could convert themselves into full service investment banks that would
broaden the market & make the service delivery much more efficient. In addition, the technology
& market developments shaping the capital market would also provide an added path to the
growth of investment banking. Better regulatory supervision & stricter enforcement of the code
of conduct of market intermediaries would ensure better issuers come to market & existing
issuers would follow enhanced standards of corporate governance. In long run, all these
developments would ensure fair returns to investors, & encourage them to invest in the market.
This would lead to growth for capital markets in general and investment banks in particular.
II. Bibliography

(n.d.). Retrieved from www. kotaksecurities.com .

Bloch, E. Inside Investment Banking.
Paulson, J. A. Investment Banking. Harvard Business School Finance Club, 1979.
SAUNDERS. Financial Institutions management.
Stowell, D. An Introduction to Investment Banks, Hedge Funds, and Private
Equity.
ANNEXURE
1. What are the services offered by Investment banks? Do their
operations in India differ from their operations globally?
2. How are Investment banks different from Commercial banks?
3. What forms a major part of the business of Investment banks?

4. How do Investment banks earn their profits?
5. What do you think is role of Investment banks in the future of the
Indian economy?
6. Who would you classify as the main clients Investment banks?
7. What are the main types of regulations that Investment banks have to
deal with? How are they different from other countries?
8. Which country has the most liberal regulations for Investment banks?
Can those regulations be replicated in India?

Analysis of Investment Banks in India

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

Analysis of Investment Banks in India

Загружено:

Авторское право:

Доступные форматы

“Analysis of Investment Banks in India”

ST. ANDREWS COLLEGE OF ARTS, SCIENCE & COMMERCE

Signature of Project Guide Signature of B.M.S. Coordinator

Signature of Principal Signature of External Examiner

I, Kiel D’Silva, of St. Andrews College T.Y.B.M.S. declare that I have

cater to a diverse group of stakeholders companies, governments, non-profit institutions, and

functions for their customers:

·​ Serve as trading intermediaries for clients

·​ Lend and invest banks' assets

·​ Provide advice on mergers, acquisitions, and other financial transactions

·​ Research and develop opinions on securities, markets, and economies

·​ Issue, buy, sell, and trade stocks and bonds

·​ Manage investment portfolios

2.​ What is investment banking?

3.​ Evolution of investment banking

4.​ Introduction of the industry

5.1​ Issue of securities, underwriting & merchant banking

5.2​ Mergers & Acquisitions Advisory

5.3​ Asset Management

5.4​ Secondary Market Activities

5.4.4​ I​ nstitutional Investing 28

5.2.​ ​ Commercial Banks 40

5.3.​ ​ Boutique Firms 40

5.4.​ ​ Brokerage Firms 41

10.​ ​Swot Analysis 49

11.​ ​Role of Investment Bankers in Developing an Economy 51

10.​ ​Figure 4.5 76

11.​ ​Table 4.6 76

12.​ ​Figure 4.7 77

13.​ ​Table 4.8 77

15.​ ​Table 4.10 78

16.​ ​Figure 4.11 78

17.​ ​Table 4.12 78

18.​ ​Figure 4.13 79

19.​ ​Table 4.14 79

20.​ ​Figure 4.15 79

levels and differentiate themselves from commercial banks.

·​ Analysis of future growth and prospects of investment banking

·​ Understanding the required qualification in the field of investment banking

for both institutions and private investors.

·​ Understanding that what type of strategy used by these organization.

successful functioning. my project is a combination of reviewing other research and descriptive

involves a logical analysis and interpretation of secondary data.

have provided relevant data for the study.

study. Two interviews were conducted.

divulge confidential information.

What is Investment Banking?

· A person or organization sometimes acts as an underwriter or mediator for corporations and

municipalities issuing securities.

securities and suggest advisory services to investors.

equity placements and corporate restructuring.

Evolution of Investment Banking in India

the bulge bracket.

SERVICE PORTFOLIO OF INVESTMENT BANKS

·​ Extent of integration between the activities.

·​ Inter relationships between activities of relates industries.

bank can be broadly given below:

CORE SERVICE PORTFOLIO

Issue of Securities, Underwriting & Merchant banking

to underwriter, or guarantee, an issue. A group of investment bankers join together to

underwriting syndicate. The commission received by the investment bankers consist of

banks help in listing of issue, issue of prospectus underwriting of issue etc.

​Mergers & Acquisitions Advisory

· Serve as trading intermediaries for clients

· Lend and invest banks' assets

· Provide advice on mergers, acquisitions, and other financial transactions

· Research and develop opinions on securities, markets, and economies

· Issue, buy, sell, and trade stocks and bonds

· Manage investment portfolios

2. What is investment banking?

3. Evolution of investment banking

4. Introduction of the industry

5.1 Issue of securities, underwriting & merchant banking

5.2 Mergers & Acquisitions Advisory

5.3 Asset Management

5.4 Secondary Market Activities

5.4.4 I nstitutional Investing 28

5.2. Commercial Banks 40

5.3. Boutique Firms 40

5.4. Brokerage Firms 41

10. Swot Analysis 49

11. Role of Investment Bankers in Developing an Economy 51

10. Figure 4.5 76

11. Table 4.6 76

12. Figure 4.7 77

13. Table 4.8 77

15. Table 4.10 78

16. Figure 4.11 78

17. Table 4.12 78

18. Figure 4.13 79

19. Table 4.14 79

20. Figure 4.15 79

· Analysis of future growth and prospects of investment banking

· Understanding the required qualification in the field of investment banking

· Understanding that what type of strategy used by these organization.

· Extent of integration between the activities.

· Inter relationships between activities of relates industries.

Mergers & Acquisitions Advisory

· The institutionalisation of corporate acquisitions by SEBI through its guidelines, popularly

· Manage the firm’s investment risks.

Ø Institutional sales group

v Non-Banking Financial Companies Acceptance of Deposits (Reserve Bank) Directions, 1998.

v NBFCs prudential Norms (Reserve Bank) Directions, 1998.

v Merchant banking business consisting of management of public offers is a licensed &

Ø Product Specialization - One way to specialize in an investment bank is through products. An

Ø Knowledge of Regulatory Bodies involved in the Various Operations - It is necessary for an

Ø Knowledge of International Business Scenario and Economic Trends -Though a researcher is

Ø Knowledge of Software Tools, Developments in the Field of Information Technology - One of

Ø Negotiation Skills - Negotiation skills is important at a variety of places. Institutional clients

• Knowledge of human psychology;

• Presence of mind to apply the appropriate skills as situation demands;