Merchant banking in India started in the early 1960s, when a few financial institutions began to provide services like underwriting, syndication, and project advisory services to the corporate sector. The development of merchant banking was spurred by the growth of the Indian economy and the need for specialized financial services to meet the requirements of the corporate sector.
In 1967, the State Bank of India (SBI) set up the first merchant banking division in India, followed by other public sector banks such as Punjab National Bank (PNB), Bank of India (BOI), and Canara Bank. These banks provided services such as project finance, underwriting of securities, and advisory services to corporate clients.
In the 1980s, private sector banks and financial institutions began to enter the merchant banking industry in India. This period saw the emergence of several private merchant banking firms, including ICICI Securities and SSKI (Sharekhan), which offered a range of financial services such as underwriting, corporate advisory, and project finance to the corporate sector.
The liberalization of the Indian economy in the early 1990s led to further growth in the merchant banking industry. With the opening up of the economy, there was an increase in foreign investment, and the demand for specialized financial services increased. In response, several foreign merchant banking firms entered the Indian market, including Morgan Stanley, Goldman Sachs, and Credit Suisse.
In the 2000s, the Indian merchant banking industry continued to evolve, with the emergence of specialized merchant banking firms that focused on niche areas such as private equity, venture capital, and structured finance. Today, merchant banking in India is a mature industry, with a number of domestic and international players offering a range of financial services to the corporate sector.
The development of merchant banking in India has been driven by a number of factors, including the growth of the Indian economy, the liberalization of the financial sector, and the increasing demand for specialized financial services from the corporate sector. The industry has played a key role in supporting the growth of the Indian economy, by providing capital and strategic advice to companies in a range of sectors.