Investment banking is a particular section of the banking system that operates in the way of providing advice based on financial transactions on behalf of corporations, governments, and individuals.
The advice can be like assisting in the company’s capital gain by acting as the financial agent to provide the securities.
The investment bank is involved in assisting M&A (mergers and acquisitions) and provides a few more services like helping in the making of the market, trading of derivatives and equity securities, etc. Investment banking also assists as a mediator between investors and companies or corporations.
Different Types of Investment Banking in India (Types of Investment Banks)
- Full-Service Firms – The investment bank has a presence in all types of areas like distribution, M&A (Mergers and acquisitions), brokerage, underwriting, asset management, structured instruments, etc. These types of investment banks work with all types of corporations and individuals.
- Commercial Banks – Commercial banks are serving in limited investment banking services in India (investment bank services in India). These commercial banks are allowed to work under section 20, which is a part of the subsidiary’s forms under 20 of the Glass – Steagall Act.
- Boutique Firms – These types of firms are also limited to particular types of investment services. Boutique Firms are allowed to serve in some specific types of investment services.
- Brokerage Firms – Brokerage firms are limited to providing investment services related to trading for retail investors as well as institutional clients. They have a large base of investors they are supposed to offer their services.
- Assets Management Firms – Asset management firms are functioning in the investment services which include investment services like wealth management, fund management, cash management, portfolio, etc. These firms also help in assisting retail and corporate investors to choose types of investment, the tenure of the corpus, types of instruments, and the purpose of the investments.
Investment Banking Companies in India
There are so many investment banking companies operating in India, here are the few investment banking companies that are the top best investment bank in India (all investment banks).
- Bank of America – Bank of America is one of the best and leading investment banking companies in the world operating in India. Banking of America operating in India as an investment bank since 1964 and has branches. This bank provides so many types of financial services in India like corporate and multinational financial institutions etc.
- Barclays Capital – Barclays Capital is also one of the investment banks operating in India. This investment bank is best for small & medium enterprises and also serves Indian corporates. Companies that need the funds to grow their business in the overseas Barclays Capital are the best fit.
- B. N. P. Paribas – B. N. P. Paribas Investment Bank is one of the leading investment banks in India operating in the country since 1860. This investment bank offers its services within the country and abroad to financial institutions.
- Citi Bank – Citi Bank operating in India for more than 100 years. This is also one of the best investment banks in India offering different types of investment services. Some of the services provided by Citi Bank are banking services and capital investment. This is international investment banking.
- J. P. Morgan – J. P. Morgan is one of the leading investment banks in the world and operating in India since 1930. J. P. Morgan provides services like business investment advice and investment banking facilities.
- Kotak Mahindra Bank Limited – Kotak Mahindra Bank is one of the famous banks in India and also provides investment services like investment banking in India. Kotak Mahindra Bank Limited provides different kinds of high-quality investment services.
- Yes Bank Limited – Yes Bank Limited is one of the banks in India offering banking services and investment banking services in India as well. Yes, Bank Limited operating in India since 2004.
Main Functions of Investment Banking (Investment Bank Functions)
There are so many roles that investment baking plays and some of the important functions of the investment bank are listed below:
- Investment Management – This is one of the services or functions of investment banking (investment bank functions). They help investors buy, manage, and invest money in different kinds of bonds mutual funds, etc. There is a separate banking department in investment banking namely private wealth management.
- Merchant Banking – It is the type of function of investment banking like private equity of the investment.
- Research – One of the best services of investment banking is research. This investment bank reviews the companies and prepares the report based on the buy and sell rating. Based on the information investment banks guide investors and companies to their financial needs.
- Risk Management – This is done by the investment bank to determine the risk capacity of the investors based on their daily investment needs and let them know the capacity of risk so that it can avoid loss if the investment turns into a bad investment.
- Structuring of Derivatives – The new types of services are offered by the investment bank by using the latest technology and providing the service so that there are greater returns on the investment made by them.
- IPOs – IPOs (Initial Public Offerings) are one of the services offered by the investment bank by providing underwriting services. The investment bank also functions as a mediator and foreign exchange management.
Investment Banking vs Commercial Banking
There are many differences between Investment banking and commercial banking. Both the carrier opportunity is good to choose both have their advantages. You can become an investment banker or work as a commercial banker it’s totally up to you. Here are some of the differences between investment banking and commercial banking.
| Criteria | Investment Banking | Commercial Banking |
| Education | MBA (Master of Business Administration) required to work as an investment banker | Degree in finance, mathematics, accountancy, and similar courses required to work in the commercial banking field |
| Skills | Communication skills should be good to succeed in the investment banking field | Professional and analytical skills are required to work in the commercial field |
| Salary | Best paid professional in the business world | Depending on the position and country |
| Work-Life Balance | Investment bankers work throughout busy hours and long-time | Commercial banking professional works during banking hours there are some exceptions |
| Services | Investment banks provide services like investment management and other different types of services to investors and corporations | Provide services to a standard level and help people to make investment |
| Clients | Government, Individuals & corporations. | All the citizens of the country |
| Income | Income through the fees and the commissions from the trading services | Mostly from fees and the interest on money |
Investment Banking vs Investment Management
Investment Banking and Investment Management are two main competitive fields in the finance industry. It is good to start a career in the domain (Investment Banking vs Investment Management) within the finance industry.
Professionals working in Investment Banking or Investment Management are highly paid jobs. There are so many differences between Investment Banking vs Investment Management.
| Investment Banking | Investment Management |
| Debt issuance is like a bond offering | Financial statement analysis |
| New securities underwriting | Portfolio allocation is like a proper mix of bonds & stocks |
| Mergers & acquisitions | Equity research & buy/sell recommendations |
| Initial public offerings (IPOs) | Financial planning & advising |
| Facilitate complicated financial transactions | Estate & retirement planning and asset distribution |
| Companies hire investment bankers to facilitate complicated financial transactions | Investment managers can work with equities |
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