INVESTMENT BANKING IN INDIA

SUBMITTED

IN PARTIAL FULFILLMENT OF

POST GRAUATE DIPLOMA IN MANAGEMENT

2017-2019

SUBMITTED BY

K.SAMPATH KUMAR

REG.NO:13025

FINANCE SPECILIZATION

UNDER THE GUIDANCE OF

PROFESSOR DR.RITU KOTHIWAL BIHANI

(FACULTY GUIDE)
Abstract

Abstract Investment banking is an important constituent of the financial market. As financial

institutions, banks have an irreplaceable part in the functioning of the world’s economies.
Together with fiscal documents and financial markets they constitute the fundaments of the
financial system. The financial market is a complicated system of interconnected relations of
particular segments of the market, and investment banking is one such part. Its existence makes
it possible to shift the savings of financial resources from saving subjects to ones in deficit by
means of mediatory activities, which is performed with the help of various kinds of financial
instruments, which are called investment instruments. The mediatory function of investment
banking is a basic feature which makes a distinction between investment and commercial
banking. Investment banks are main mediators that place released resources (savings) into the
stock market. As is well known from the inherent laws of economy, the role of investments is
crucial for a healthy circulation and functioning of the state economy. Without them the steady
economic growth would be impossible. Due to these reasons I decided to analyse investment
banking: its development and economic context, as well as the legal basis of these institutions
and their activities in Czech system of law. In this diploma thesis I analyse particular aspects of
investment banking and at the same time I point attention to regulations that might lead to
interpretation problems. The diploma thesis consists of five chapters, each of which analyses a
different aspect of investment banking. The first chapter describes the evolution of investment
banking from its beginning to the present. The second chapter analyses the financial crisis of
2008 and contains case studies of the fall of the biggest investment banks. The third chapter deals
with investment banking as a component of the financial market, and with investment bank; the
subchapters describe the structure of investment banks, their integration in Czech legal system,
their inner structure, organization structure and risks connected with investment banks. The fifth
chapter deals with investment transactions of bank.

In this diploma thesis I used the method of analysis, synthesis, empiric and dimensional analysis,
the comparative method, the method of deduction and the logical method. The aim of this thesis
was to create a comprehensive tutorial for persons interested in this topic, as it has not been
described in its complexity at our faculty yet.

INTRODUCTION

Investment banks play a significant role in the financial services sector. However, Investment
banking, as advisory financial services, emerged rather late. Formal Investment banking service
in India originated with the setting up of the Investment banking division by the Grind lays Bank
in 1969 for undertaking management of public issue and financial consultancy, followed by other
foreign banks.

Pursuant to the recommendations of the Banking Commission (1972), State Bank of India started
Investment banking service in 1973. The ICICI Ltd was the first development finance institution
to initiate such service in 1974. The period following the mid-seventies witnessed a boom in the
growth of Investment banking organizations in the country which were sponsored by banks,
financial institutions, NBFCs Brokers and so on. This led to diversification into the scope of
these activities such as loan syndication, portfolio management, corporate counseling, project
counseling, debenture trusteeship, mergers, Amalgamations & takeovers and so on.

Investment banking is a particular form of banking which finances capital requirements of an

enterprises. Investment banking assists as it performs IPOs, private placement and bond
offerings, acts as broker and carries through mergers and acquisitions.
But the scope of such services was neither defined nor was a set of rules and regulations
governing them in place. The formation of SEBI in 1992 was a landmark in the evolution of
Investment banking as a professional service in the country. Investment banking organizations
have to be mandatorily registered with SEBI. While Investment bankers are currently providing a
variety of services, registration with SEBI is required for (i) Capital issues related activities :
both pre-issued and post-issue, (ii) mergers and acquisitions, and (iii) Portfolio Management.

DEFINITION
“A Investment banker is any who is engaged in the business of issue management either by
making arrangements regarding selling, buying or subscribing to securities or acting as manager/
consultant / advisors or rendering corporate advisory service in relation to such issue
management.”

OBJECTIVE

The main objective of the project is to :

1. Study the overall view of the Indian Investment Banks.

2. Study the Regulatory Requirement for Registration of Investment Banks.

3. Know the Revenue (Brokerage / Commission) Generation Pattern of the Investment

Banks.

4. Know the Pre-Issue & Post Issue Management of IPO & Process.

RESEARCH METHODOLOGY

The research methodology used for the project report is descriptive and research is based on the
Primary and Secondary data sources. These include “ADANI Power IPO” & Offline IPO
Bidding Manual Published by ICICI Securities at the time of IPO for its Various Sales Channels
like Sub-Broker, Center Sales & Retail Channel, ICICI Direct Websites, ICICI Intranet and
related statistics. As far as other information is concerned I had personally visited the department
& met concerned people in various department, they explained to me the process and
responsibilities of the team. They helped me to understand the meaning & relevance of each
parameter considered in the project.

DATA COLLECTION

The objective of this exercise is to get the overview of the Investment Banking Structures in
India. I have collected the data from following data sources.

1. Data related to Registration, Functions, Code of Conducts of Investment Banks taken

from the SEBI Website and Investment Banking book of R Machiraju.
2. Raw data related to Adani Power IPO and Bidding Manual process has been collected
from the ICICI Intranet Portal.

3. Data related to the ICICI Case studies collected from the various department of ICICI
Securities with the prior permission of department Head.

Company Profile

CICI Bank Limited (the Bank), incorporated on January 5, 1994, is a banking company. The Bank is
engaged in providing a range of banking and financial services, including commercial banking, retail
banking, project and corporate finance, working capital finance, insurance, venture capital and private
equity, investment banking, broking and treasury products and services.

The Bank's business segments are Retail banking, Wholesale banking, Treasury, Other banking, Life
insurance, General insurance and Others. The Retail banking segment includes exposures, which satisfy
the criteria of orientation, product, granularity and low value of individual exposures for retail exposures
laid down in Basel Committee on Banking Supervision document International Convergence of Capital
Measurement and Capital Standards. Wholesale Banking includes all advances to trusts, partnership
firms, companies and statutory bodies, which are not included under Retail Banking. Treasury includes
the entire investment and derivative portfolio of the Bank. Other banking includes leasing operations and
other items not attributable to any particular business segment of the Bank. Life insurance represents
results of ICICI Prudential Life Insurance Company Limited. General insurance represents results of
ICICI Lombard General Insurance Company Limited. Others includes ICICI Home Finance Company
Limited, ICICI Venture Funds Management Company Limited, ICICI International Limited, ICICI
Securities Primary Dealership Limited, ICICI Securities Limited, ICICI Securities Holdings Inc., ICICI
Securities Inc., ICICI Prudential Asset Management Company Limited, ICICI Prudential Trust Limited,
ICICI Investment Management Company Limited, ICICI Trusteeship Services Limited and ICICI
Prudential Pension Funds Management Company Limited.

The Bank has a network of approximately 18,210 branches and automated teller machines (ATMs). The
Bank's mVisa service allows customers to scan a Quick Response (QR) Code at merchant outlets and
make a payment. Its Eazypay enables customers of all banks to pay merchants online without any
registration. Voice Biometric enables the Bank to recognize its customers' voices over the phone, allowing
them to access their accounts. Its iLoans application allows customers to track and access all their loan-
related details. Its Money2World is an online outward remittance service for resident Indians. The Bank
has approximately 110 Touch Banking branches across over 30 cities. The Bank has opened over 20
million Basic Savings Bank Deposit Accounts (BSBDA) through its branch and Business Correspondent
(BC) network.

The Bank offers a suite of banking products and solutions to Small and Medium Enterprises (SMEs) for
meeting their business and growth requirements. The Bank also offers supply chain financing solutions
and small-ticket funding to the channel partners of large corporates. The Wholesale Banking Group
(WBG) provides customized solutions to corporate clients by analyzing their specific business and
financial needs. It provides an array of financial solutions for working capital finance, export finance,
trade, transaction and commercial banking, foreign exchange and derivative products and rupee, as well
as foreign currency term loans. The Commercial Banking Group manages banking transactions, trade
based requirements and cash management needs of corporate customers. Its treasury operations comprise
the Asset Liability Management Group, Markets Group and Proprietary Trading Group. The Asset
Liability Management Group actively manages the Bank's liquidity and securities portfolio held for
compliance with statutory and regulatory requirements. The Markets Group offers foreign exchange and
derivative solutions to clients. The Proprietary Trading Group manages trading positions within the
approved risk limits. The Bank's international banking is focused on providing end-to end solutions for
the international banking requirements of its Indian corporate clients and leveraging economic corridors
between India and the rest of the world.

The Bank's international footprint consists of subsidiaries in the United Kingdom and Canada, branches in
the United States, Singapore, Bahrain, Hong Kong, Sri Lanka, Dubai International Finance Centre, Qatar
Financial Centre, China and South Africa, and representative offices in the United Arab Emirates,
Bangladesh, Malaysia and Indonesia. The Bank's subsidiary, (ICICI Bank UK Plc), has approximately
eight branches in the United Kingdom and a branch each in Belgium and Germany. ICICI Bank Canada
also has over eight branches. The Bank has developed customized financial products and services to cater
to a range of rural customers, including farmers, traders, processors, as well as rural entrepreneurs. The
Bank caters to the financial needs of women entrepreneurs through its Self-Help Group (SHG) program
as a part of its microfinance initiatives.