7 Main Functions of Investment Banking Firm

Investment banks are the intermediary organisations that serve a variety of services such as handling of mergers and acquisition, underwriting of new stock issues, and acts as a financial advisor. They act as a middleman between issuer and investor and helps clients raise capital through equity and debt offering. Some of the investment banks are Goldman Sachs, JP Morgan Chase, Morgan Stanley, Credit Issue, etc.

Functions of investment banking firms are:

1. Advisor : An investment bank serves as an adviser to any company and assists in the best possible way to raise capital, including selling bonds and shares, if necessary. Financial analysts analyse various factors, such as earning potential, before selling their stocks or bonds to determine the value of the company. Banks advise the company’s management on how valuable the company is and how the organisation is likely to benefit from merger and acquisition.
2. Underwriting stocks and bonds: If an individual decides to raise capital through a sale of equity and bonds, the shares will also be underwritten by one or more investment banks. This ensures that the company purchases or re-sells a certain number of shares – or securities – at a fixed value via an auction.
3. Research: Bigger investment firms have analysts who analyse business information and decide how they are likely to benefit from selling or buying. Reports are sold to managers of mutual funds and hedge funds for capital generation.
4. Trading and sales: Various firms have a department for trading that can sell bonds or stocks as per the need of their clients.
5. Asset Management: Companies such as Goldman Sachs and JP Morgan use their asset management division to handle pension funds, insurance companies and charity accounts.
6. Wealth Management: Investment banks also provide funding options for pension and other long-term needs of individuals and families.
7. Securitized Products: Enterprises also pool financial assets these days – from loans to receivables from credit cards – or market them as fixed-income securities to shareholders. An investment bank will propose sources of income to be "secured," arrange the assets, and sell them to institutional investors.

Is This Going to be the Myth of “The Great Indian Loan Market” from the Perspective of Corporate Lending?

At the turn of this century, many multinational companies lost millions of dollars in Indian market because of the over-projection of this term “The great Indian middle class.” Is this history going to repeat itself in the present day loan market of India? The intensity of this question becomes even bigger when we see it from the perspective of the big investors who are seeking for corporate lending. 

Media Reports Are Shocking and Industry Pundits Are Surprised 

The result of the 2019 LS elections in India made this country a land full of corporate lending opportunities. The reason is quite simple, it is expected that the unorganized sector of the market will now start participating directly in the mainstream economy. In order to fill certain gaps, financial institutions of the country are promoting a culture of loans. In the books of corporate lending opportunities, these types of loans can act as a leveler and bring the markets into the zone of the perfect competition (Anand, 2019).  

However, the media reports are constantly raising doubts over the suitability of new loan criteria adopted by some of the disparate players in the market (Why Indian lenders are giving loans to risky customers with low credit scores, 2019).  If you are seeking to check the validity of any investment opportunity in the field of corporate lending then take the support of experts representing RESURGENT INDIA and secure your interests.