How Is Investment Banking As A Career In India?

November 2, 2024 Sujata Gupta

In a country where the GDP growth rate is in the top 10, Investment banking as a career in India is not limited. India’s population was around 1.4 billion in June 2023. India ranked 5th with 3750 GDP (USD Billion) in the world’s top 10 largest economies in 2023. A good economic country (India) gives you the best investment banking jobs offer. The developing country India is at the top in giving an average salary as an investment banker. Investment Banks in India ease coordination between sellers and investors. Their interns receive sharp training programs with the best investment banking internships.

A Glance at Investment Banking Before We Looked Into a Career in Investment Banking in India

The trading Company deals with shares, stocks, and bonds. The very first trading firm was The Dutch East India Company. It was a shared firm and was the first listed company on the stock exchange. Investment Banking started to crawl as a partnership firm. In the beginning, Investment banking had only two functions: – Stock launches (IPOs) and Secondary Distribution (brokerage, mergers, and acquisitions).

In the 21st century, the SEC (Security and Exchange Commission) told Goldman Sachs and Morgan Stanley to file their reports. So that the SEC has the information about their business. The information submitted by them shows the three segments of financial services. These services help investors to make an informed decision. The three segments are: –

Investment Banking. (Mergers, Acquiring, Advisory Services, and Securities Underwriting)
Asset Management. (Sponsored Investment Funds).
Trading and Principal Investments. (Broker-Dealer types of work)

The Glass-Steagall Act was enacted in 1933. This act separated commercial banks and investment banks in the United States. This meant that banks could not engage in both types of activities at the same time. But this act ended in 1999 with the Gramm-Leach-Biley Act. The Biley Act allowed commercial banks to engage in investment banking activities and vice versa. The G7 countries did not have any legal proof of the Steagall Act. So they could perform in both banks without any legal constraints.

To prevent the financial crisis in 2008, the Dodd-Frank Act was introduced. Volcker Rule, One of the provisions of this act aims to separate investment banking services from commercial banking. This rule mentioned that the banks could not engage in both activities simultaneously.

Acquisition banks help individuals and governments by advising them on financial transactions. The Front Office, Middle Office, and Back Office are the three pillars of investing banks. The front office is a revenue role that includes investment banking and markets.

The front office is a revenue role that includes investment banking and markets. Sales, trading, and research are three pathways to markets. The big-scale investment banks deal in the Sell Side and Buy Side. They do not function like commercial banks. “Sell Side” involves trading securities for cash or the promotion of securities. The “Buy Side” concerns the provision of advice to institutions that buy investment services.

Investment banks are private banks. They deal in both corporations issuing securities and investors buying securities. Investment bankers release stocks and equity to the public markets on time in a proper manner.

What Are the Basic Duties of Investment Banking?

Read about the functions of an investment banker before taking any further steps towards investment banking as a career in India.

Investment banks help raise financial capital by acting as the client’s agent.
They provide advisory services for the companies.
Investment advice and management.
Investment banks act as intermediaries between corporations and investors when companies want to issue stock or bonds.
Examining financial statements.
Added functions like market making, trading of derivatives, and equity securities.

Types of Investment Banking

Here are three basic categories of investment banking based on the size of the bank and its services:

Bulge bracket banks: These banks have a wide range of services and deal globally. Goldman Sachs, JP Morgan, and Morgan Stanley are some examples of it.
Middle market banks: These banks deal on a smaller scale and come after the Bulge Bracket Banks. Give services such as underwriting, advisory, and capital raising.
Boutique investment: These banks are small banks that focus on specific industries. It offers personalized services to clients and may focus on a particular geographic industry.

The Consequence of Investment Banking Upon a Country (India)

If you choose investment banking as a career in India, you need to know about the Indian economy first. Because the investment banks affect the country’s economy on a large scale. Investment banks play a vital role in the country’s robust economic growth. Let me show you some aspects of investment banking that help a country to grow:

Economy Growth: A country’s economic rate tells us about the prosperity rate of that country. Investment banks have a positive impact on a country’s economy. They nourish businesses by providing capital financing. And make sure that the flow of money in the markets goes well. Companies go public through investment banking.

It can also help explore best sellers and attract investors to add markets’ liquidity. Acquisition banks play a mediator role in the economic development of a country by making direct and indirect investments. According to One, Two, and Three, India ranks fifth in the world’s economy. An account from PricewaterhouseCoopers (PwC) predicts that India’s GDP rate will surpass that of the United States by 2045.

Capital Formation: It is a statistical graph (nowadays net investment) used in macroeconomics. It is the net addition of the physical assets of an economic country in an accounting period. Capital formation is the core of economic growth. It circulates people’s savings and investments in the economy. Enhance more production of goods and services.

It depends on the income of the people and their savings. The higher the savings higher the capital formation. The bottom line is that if your country’s capital formation is strong, your market is blooming. Thus, it opens the door to jobs in the investment banking sector. In a report by the World Bank, India’s gross fixed capital formation was 31.2% in 2022. That shows India is investing in new resources and products with both hands.

Employment Opportunity Creation: This creation creates new job opportunities. It is a regional and geographical-based process. A job opportunity reduces the poverty of a country. Improve the living standard of the people as well as nourish economic growth. The key to creating employment opportunities is investment. Investment in education, infrastructure, finance, healthcare, and entrepreneurship. All the investment leads to new job opportunities for the people of the country. According to GlobalData, India’s employment rate increased by 5.2% compared to last year.

Financial Invention: This invention creates the process for new financial products and services (jobs). Financial tools help people manage their money so that they can invest it in the future. Stocks, Bonds, and Exchange-traded funds are some examples of financial products. Financial innovation focuses on fiscal development through a variety of strategies. Its sole aim is to enhance financial services for the government and individuals. And all this happens through investment banks only. Investment banks are the pathway to financial innovation.

Coordination of present and future consumption: Investment banks review the market’s ongoing interest rates with the help of commercial banks. The interest rate for investment banks is different from that of commercial banks. Despite this, acquisitions banks help establish healthy market rates of interest. They buy and sell securities by which interest rates are examined. Investment banks do a great job of bridging the present and the future. They establish the market’s interest rates in such a way that they coordinate with present and future needs.

Now, we have seen how an acquisition bank helps a country to flourish. It accelerates economic growth, circulates capital into the markets, and gives job opportunities. It also creates new fiscal services and balance between past and future needs. Investment banks make profits on behalf of the country and spread the profit to its people. And because of all this, there is an increase in investment banking jobs in India. Investment banks in India train their trainees according to the existing market. They provide market-based internships in investment banks so that the average salary of an investment banker can increase.

Why Do We Opt for Investment Banking as a Career in India?

Investment banking job is a dream job for every finance aspirant. It is the most reputed and high-earning job in the finance sector. If you wish investment banking as a career in India, you have to look first at the growth percentage of investment banks in recent years in India. Let’s have a look.

In the opinion of the Economic Times, “In 2021, investment banks of India make a record by earning Rs.2200 crore. The same year, investment bankers piled Rs. 776.7 crores in share sale fees. This share sale fee was three times more than the previous year. The year 2021 was pleasing for tech companies like Zomato and Paytm. They had more IPOs than in the year 2020. As a result, bankers’ fees increased. In 2021, acquisition banks made a lot of money by underwriting. At that time, many companies went public, due to which IPOs increased. The reason behind it was to raise capital or give investors withdrawal opportunities.

In 2022, India’s involvement in mergers and acquisitions (M&A) was approximately $170.7 billion. The total increment was 38.2% compared to the previous year. It was the highest annual period since the research firm began to watch the data. The number of reported deals also grew by 14.7%. All this made M&A a wholesome market. The lift in M&A activity and advisory costs is an acceptable term in the investment banking industry. This a sign that Indian companies are becoming more curious about M&A activity.

Also Read: Investment Banking Jobs

The Reach of Investment Banking as a Career in India

The opportunity you get as an investment banker in India is vast. The growth percentile of acquisition banks increased over the years. And so the investment banking jobs in India. The area of this particular field gave you a variety of jobs as well as internships. Investment banking as a career in India is divided into many levels of responsibility. From entry-level to senior-level job roles are open in the market of acquisition banks. We are together going to learn about each scenario.

Analyst Role: Analyst professionals come under entry-level job roles. Their core role is to help the senior members. They help with preparing financial analyses, presentations, and market research. They are also responsible for collecting data for better investment decisions. Analysts always work in teams and collaborate with other professionals. Like, portfolio managers, traders, and investment bankers.

Associate: Associates have more responsibility than analysts. Associates work on the day-to-day management of transactions. They check whether the workflow of the analysts is going well and within the given time. Associates’ work is guiding the senior bankers and clients. They lead consumers in deal execution, financial modeling, and due persistence. They examine the legal documents of the target company to identify potential risks. After two to three years of experience, analysts are promoted to an associate.

Vice President: In finance banking, VPs or Vice Presidents hold a more senior position in a company. VP’s duties are to manage client relationships. It includes building and maintaining strong connections with clients and understanding their preferences. VPs lead groups of professionals to execute transactions. Transactions are identical to Mergers and Acquisitions, Initial Public Offerings, and debt offerings. They make sure all aspects of the deal are going great. In business development, VPs identify new opportunities for the company to grow. They do market research, build networks, and create a strategy for the company. VPs are responsible for the client’s satisfaction.

Director: Directors are high-level professionals in investment banking. They have ample experience and expertise in this particular field. They lead and direct the team on different banking projects and transactions. They provide strategic advice to clients and customize solutions for them. Directors help to develop new products and services. And Extend it into new markets and geographies.

Managing Director (MD): Managing Directors are the top managers in finance banking. They hold top-level positions in the organization. MD supervises the whole operations of the investment banking sector. Their role is to set the strategic direction of the division. They are the developers of long-term plans. MD ensures all the divisions align with the total goals. Managing Directors are also responsible for managing the division’s budget. They have a deep knowledge of the finance banking industry. It Includes market trends, regulatory requirements, and competitive landscape.

Front Office, Middle Office, and Back Office: Acquisition banks have a list of work to do, relying upon the structures. We can split these structures into three sections: Front, Middle, and Back Office.

Front Office: The front office interacts directly with the clients and customers. They discover possible deals and perform them on behalf of the clients. They are good at communication and interpersonal skills. That is why they are the face of the company. Sales and Trading desks and Equity Research come under the front office.

Middle Office: The middle office’s responsibility is to support the front office. These supports are risk management, conformity, and operations support. The median office checks if the completed work of the front office is obedient to the regulations or not. The experts of the middle office have strong analytical and problem-solving skills.

Back Office: The administrative and operational tasks come under the back office. The IT and Technology experts work in the back office. Technology experts are responsible for settlements and documentation-related tasks. They make sure these tasks come to perfection. Back office roles need strong attention to detail and organizational skills.

What Are the Advantages of Investment Banking As a Career in India

The Bureau of Labor Statistics has cast the demand for financial services sales agents. It tells investment bankers will grow by 4% by 2029. The sudden shift is possible by the employment change of 17,400 worldwide.
The average salary of an investment banker is up to INR 3-10 Lakhs Per Annum depending upon the company.
Depending upon their experience, Analysts and Associates can earn about INR 8-17 Lakhs Per Annum.
Vice Presidents with immense experience can make up to INR 30-70 Lakhs Per Annum.
Directors and Executive Directors (The more senior post) can receive up to INR 50-1 Crore Per Annum.
Managing Directors (The top-level post) of investment banks in India can make up to INR 1-5 Crore Per Annum.
The generous benefits packages that investment bankers often receive are commissions and bonuses. Also, they get insurance coverage, such as health, life, and disability insurance.
Investment bankers may also enjoy exclusive events, travel opportunities, and other lifestyle benefits. These can enhance their quality of life.
As an investment banker, you are going to interact with stakeholders daily. It can help in building healthy relationships and networks. Networking is an essential skill needed for an investment banker. It also helps in expanding the professional circle and gaining new opportunities. A healthy network leads to identifying potential clients, pitching their services, and closing deals. Networking can also help investment bankers in gaining referrals.
Acquisition banks provide excellent career opportunities as well as professional growth potential. They give you training and development programs to work with international markets.
The investment banking sector is expanding. The companies will need the help of investment bankers for various purposes like investing, raising funds, buying assets, selling assets, and increasing return on investment. Thus the demand for an investment banker is high nowadays.

Working Atmosphere of Investment Bankers in India

If you opt for investment banking as a career in India, you need to know about the workload of an investment banker. The working environment of a banker in investment banking in India can be demanding, fast-paced, and hard. Acquisition Banks are infamous for their extended working hours. Investor bankers are not suitable for the 9 to 5 jobs role.

When the time comes, there is no difference between day and night. Bankers deal with a large amount of money and high-stakes transactions. Making a mistake can cost you a big as it is a matter of amount of money. They have to work with the clients with great attention to build strong relationships. Practical teamwork is a plus point for a banker. Bankers are extensive readers too.

They have to be up to the mark with the market fluctuation. The working atmosphere can vary from company to company. The individual has an intense schedule as an investment banker, but as it says, if there is pain, there is gain. The lucrative money and high-profile status are the very first points to attract.

How to Become an Investment Banker

Investment banking is the core of the finance department. They come along. Investment banks demand both high skill and high education. If you want to secure investment banking as a career in India, here are some points to cite:

Entry-level posts demand at least 3 to 4 years of a bachelor’s degree after completing the 10+2. Bachelor’s degrees in finance, economics, accounting, business, and mathematics are fit for bankers.
Degrees in Computer Science, Liberal Arts, or Physics are also suitable for bankers.
If you want a high position in this field, you will do a Master’s Program. Master of Business Administration (MBA) in finance and a Chartered Financial Analyst (CFA) are suitable for the high posts.
A law degree or Master’s Program in Financial Mathematics also appeals to this sector.
The grades of the Bachelor’s degree and the Master’s program are very crucial for this job.
You will secure at least 55% of the total marks in the qualifying exam.
After 6-7 years, you become an investment banker.

Check here for the best investment banking courses:

List of Investment Banks in India

Before we jump on the investment banks in India, let’s learn about the history of these banks in India first. European banks established the trading company in India in the 19th century, which opened the path of investment banks in India. By that time, foreign banks had all the powers in their hands. After 1970, the foreign banks lost their powers one by one due to merchant banking services offered by the State Bank of India and ICICI.

It was the year 1990 when the investing banks earned attention globally through the registration of over 1500 bankers with SEBI. This immense amount of registration gave birth to the Association of Investment Bankers of India (AIBI). The core function of AIBI was to promote ethical practices and expand the industry.

Many banks and financial institutions come under AIBI. They have made a name for themselves in the investment banking industry in India. Following are the banks that give you a chance to set up investment banking as a career in India. Also, AIBI associates with them.

Axis Bank Ltd.
Barclays Bank PLC.
Central Bank of India.
BNP Paribas.
Credit Suisse Securities (India) Private Ltd.
Deutsche Equities India Private Ltd.
Edelweiss Financial Services Ltd.
HDFC Bank Ltd.
HSBS Securities and Capital Markets (India) Private Ltd.
ICICI Securities Ltd.
IDBI Capital Market Services Ltd.
JP Morgan India Private Ltd.
Morgan Stanley India Co. Private Ltd.
Religare Capital Markets Ltd.
SBI Capital Markets Ltd.
SMC Capitals Ltd.

Books Related to Investment Banking as a Career in India for Better Understanding

There are so many books on investment banking as a career in India. If you want to explore the functions and responsibilities of an investment banker before going to the academic, then here are a few Google search book list names:

“Investment Banking Explained: An Insider’s Guide to the Industry” by Michel Fleuriet.
“Investment Banking: Valuation, Leveraged Buyouts, and Mergers and Acquisitions” by Joshua Pearl and Joshua Rosenbaum.
“The Business of Investment Banking: A Comprehensive Overview” by K. Thomas Liaw.
“Monkey Business: Swinging Through the Wall Street Jungle” by John Rolfe and Peter Troob.
“The Accidental Investment Banker: Inside the Decade that Transformed Wall Street” by Jonathan A. Knee.
“Liar’s Poker” by Michael Lewis.
“Investment Banking: Theory, Practice, and Cases” by Rajiv Srivastava and Anil Misra.
“Investment Banking for Dummies” by Matt Krantz.

FAQs: Investment Banking as a Career in India

1. Difference between merchant banking and investment banking as a career in India.

Merchant Banking and Investment Banking are two branches of financial institutions. They provide services to businesses and high-net-worth individuals. Merchant Banking deals with international finance, business loans, and underwriting. It focuses on long-term investments. Aids financial services to cooperations and encourages mergers and acquisitions. Investment Banking performs as mediates for large and complex financial transactions. Their clients are institutional investors, governments, and associations. Focuses on short-term investments and aid financial services to individuals and institutions. You should be clear about these two before taking action on investment banking as a career in India.

2. Commercial banking vs. investment banking.

Commercial banks’ core roles are to deposit and lend money to the institutes and primarily work with business clients. They deal with small and mid-sized businesses. These banks use their customers’ money to fund loans and mortgages. The interest on these loans becomes the profit of the banks. Commercial banks charge fees for specialty services, such as payment processing or payroll services. Investment stakes specialize in helping companies to maintain their capital via stock and bond issues. Investment banks raise money by selling securities, such as stocks and bonds. Investment banks serve as a bridge between companies seeking capital and investors looking for investment opportunities.

3. Minimum Qualification to achieve investment banking as a career in India.

An investment banker in India must hold a graduate degree in any field. But a degree in finance, economics, business, and mathematics will give you extra benefits. You should secure a least 50% of total marks in the higher secondary (10+2). Along with the educational qualifications, you must have an analytical mind, out-of-the-box thinking capacity, high analytical ability, and specific skills to excel in your career.

Closing Note On Investment Banking Career As a Career in India

We have learned approximately all the leading areas of investment banking as a career in India. Like the Average salary of an investment banker in India, Investment Banking internships in India, Investment Banking jobs in India, Investment Banks in India, and some book suggestions for a basic understanding of the role of investment stakes in the country. I hope now you have clear thoughts about it. A bright investment banking as a career in India awaits you.

Vaibhav Kakkar