PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL

MARKETS IN KOTAK MAHINDRA BANK

INTRODUCTION:
Investment banking is a particular form of banking which finances capital requirements of an
enterprise. Investment banking assists as it performs IPOs, private placement and bond
offerings, acts as broker and carries through mergers and acquisitions. Investment banking is a
field of banking that aids Kotak Mahindra Bank in acquiring funds. In addition to the
acquisition of new funds, investment banking also offers advice for a wide range of transactions
a company might engage in. Traditionally, banks either engaged in Kotak Mahindra banking
or investment banking. In commercial banking, the institution collects deposits from clients
and gives direct loans to businesses and individuals. Through investment banking, an
institution generates funds in two different ways. They may draw on public funds through the
capital market by selling stock in their company, and they may also seek out venture capital
private equity in exchange for a stake in their company. An investment banking firm also does
a large amount of consulting. Investment bankers give companies advice on mergers and
acquisitions, for example. They also track the market in order to give advice on when to make
public offerings and how best to manage the business' public assets. Some of the consultative
activities investment banking firms engage in overlap with those of a private brokerage, as they
will often give buy-and-sell advice to the companies they represent. The line between
investment banking and other forms of banking has blurred in recent years, as deregulation
allows banking institutions to take on more and more sectors. With the advent of mega-banks
which operate at a number of levels, many of the services often associated with investment
banking are being made available to clients who would otherwise be too small to make their
business profitable.

PROBLEM STATEMENT
A progression is usually a move in a forward or upward direction in most spheres of life, this
connotes a regression. The development of an economy is not an exception to this reasoning.
Economic development is not achievable without an improved rate of capital formation one
important way of capital formation for developing economies is through improving their
investment banking industries. Since the turn of the 20th century, investment banks have been
providing financial intermediary services, which have been integral to the efficient operation

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

of the financial system (Chu, 1990) They play an important role in the market for corporate
control; they advise the bidder and the target, evaluating the assets of the target firm and
providing technical and tactical assistance throughout the takeover process.

While the strength of securities markets that make investment banks focal points of modern
finance is their ability to mobilize long term savings for financing long term ventures, to
improve efficiency of resource allocation through competitive pricing mechanisms, to provide
risk capital (equity to entrepreneurs), and to encourage broader ownership of firms (Goar,
1991), India is plagued with less efficient financial market characterized with various problems
in accessing long-term funds. Any company intending to raise capital, therefore, finds itself in
a precarious position and investors also have to contend with bearing huge losses when a player
in the capital market enters into liquidity problems It is due to this importance of the
development of investment banks and the direct effect that the investment banks and banking
has on growth of emerging markets that intensive studies should be done on this gap Locally,
very few studies have been done in India related to the impact of investment banking
development on economic growth of emerging markets (Otieno and Schmidt 1996) Moreover
Mohamed (2006) studies considered the relationship between stock market development and
economic growth without considering the role of the Kotak Mahindra banking sector. The
study uses pooled cross-country time series regressions considering the data on 21 firms over
a period of 5 years The paper used an aggregate index of overall stock market development
constructed by Demirguc-Kunt and Levine (1996) which combines information on stock
market size, liquidity and integration with world capital markets While assessing the
relationship between stock market development and economic growth the paper includes a
large number of control variables viz., the logarithm of initial per capita GDP, the logarithm of
initial secondary school enrolment rate, the number of revolutions and coups, the ratio of
government consumption expenditures.

NEED FOR THE STUDY

Investment banks have multilateral functions to perform. Some of the most important functions
of investment banking can be jot down as follows:

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PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

 Investment banking help public and private corporations in issuing securities in the
primary market, guarantee by standby underwriting or best efforts selling and foreign
exchange management. Other services include acting as intermediaries in trading for
clients.
 Investment banking provides financial advice to investors and serves them by assisting
in purchasing securities, managing financial assets and trading securities.
 Investment banking differs from commercial banking in the sense that they don't accept
deposits and grant retail loans. However the dividing line between the two fraternal
twins has become flimsy with loans and securities becoming almost substitutable ways
of raising funds.
 Small firms providing services of investment banking are called boutiques. These
mainly specialize in bond trading, advising for mergers and acquisitions, providing
technical analysis or program trading.
 Unlike traditional banks, investment banks do not accept deposits from and provide loans to
individuals also called investment banker.
 Investment banks help companies and governments (or their agencies) raise money by
issuing and selling securities in the capital market (both equity and debt).
 Almost all investment banks also offer strategic advisory services for mergers, acquisition,
divestiture or other financial services for clients, such as:
 trading of derivatives
 fixed income
 foreign exchange
 commodity
 Equity security.
 Trading securities for hard cash or securities (i.e., facilitating dealings, market-making), or
the endorsement of securities (i.e., underwriting, research, etc.) is referred to as the "sell side".
 On the other hand the "buy side" constitutes :
 the pension fund,
 mutual funds,
 hedge funds,

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

 The investing public who use the goods and services of the sell-side with the intention
of make best use of their return on investment.

Many firms have both buy and sell side mechanism.

OBJECTIVES OF THE STUDY

 The study sought to establish the impact of investment banking on economic growth in
Kotak Mahindra Bank Sector.
 The study will be invaluable to the management of the investment banks as it will form
a blueprint on how they can enhance investment in security for Kotak Mahindra Bank.
 The study will be of importance to capital market regulators, for example the CMA
since by identifying the importance of investment banks they will implement regulation
that would not be a scuttle neck to the investment banks (Shankar Rao, 2000) at Kotak
Mahindra Bank.
 The study will also be of importance to academicians or Indian scholars for it will form
an invaluable source of material upon which further research and studies will be based

SCOPE OF THE STUDY

An investment bank is a financial institution that assists corporations and governments in
raising capital by underwriting and acting as the agent in the issuance of securities. An
investment bank also assists companies involved in mergers and acquisitions, divestitures, etc.
Further it provides ancillary services such as market making and the trading of derivatives,
fixed income instruments, foreign exchange, commodity, and equity securities for Kotak
Mahindra Bank Sector.
Unlike commercial banks and retail banks, investment banks do not take deposits. Trading
securities for cash or securities (i.e., facilitating transactions, market-making), or the promotion
of securities (i.e., underwriting, research, etc.) was referred to as the "sell side". Dealing with
the pension funds, mutual funds, hedge funds, and the investing public who consumed the
products and services of the sell-side in order to maximize their return on investment
constitutes the "buy side". Many firms have buy and sell side components.

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

Investment banks help companies and governments and their agencies to raise money by
issuing and selling securities in the primary market. They assist public and private corporations in
raising funds in the capital markets (both equity and debt).Investment banks also act as
intermediaries in trading for clients. Investment banks differ from commercial banks, which take
deposits and make commercial and retail loans. In recent years, however, the lines between the two
types of structures have blurred, especially as commercial banks have offered more investment
banking services. Investment banks may also differ from brokerages, which in general assist in the
purchase and sale of stocks, bonds, and mutual funds. However some firms operate as both
brokerages and investment banks; this includes some of the best known financial services firms in
the world regarding Kotak Mahindra Banking Sector Improve investment products.

RESEARCH METHODOLOGY
This section discusses the research design, target population, research instruments, data
collection and data analysis procedures that were used in this study. It discusses the
methodology used to analyses the impact of investment banking development on economic
growth of Kotak Mahindra Bank at Bangalore.

RESEARCH DESIGN

This was a descriptive study for Kotak Mahindra Bank, according to Schinler and Coopers
(2004) descriptive studies are more formalized and typically structured with clearly stated
hypotheses or investigative questions. It serves a variety of research objectives such as
description of phenomenon or characteristics associated with a subject population, estimates of
proportions of a population that have these characteristics and discovery of associations among
different variables.

TARGET POPULATION

This study was carried on investment banks in Kotak Mahindra Bank and the population of the
study will be all the 23 investment banks in India (CBK, 2008).

DATA COLLECTION

Secondary data was used in this study, this was obtained from the NSE database and included
Gross Domestic Product measured as the real GDP value generated within a given year;

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

average commission fee charged by the investment banks in India; the total number of
investment banks in India within the year; the total value of stocks traded or transacted within
the year; the trading cycle within the investment market to measure the microstructure of
investment markets. The data was supplemented with data from various government
publications such as the Central Bank of India publications (Annual Bank Supervision Reports)
and Central Bureau of Statistics data (Economic Surveys).

DATA ANALYSIS

The research is both quantitative and qualitative in nature this implies that both descriptive
statistics and inferential statistics was employed once the data is collected it was checked for
completeness ready for analysis. The data from the field was first coded according to the themes
researched on the study. Analysis was done with aid of the statistical package for social
sciences (SPSS) package. Descriptive statistics generated such as percentages, mean scores and
proportions was presented in tables and figures. Qualitative data from open questions was
presented in prose.

MODEL SPECIFICATION

Granger causality test model (1973) was utilized to measure the linear causation between the
impacts of investment banking on economic growth of Kenya. Simple OLS (Ordinary Least
Square) method was used to see the relationships. The detail of formulation of regression
equations has been explained as below multiple linear regression model was used to test the
impact of investment banking on economic growth of emerging markets.

The model was of the j form: GDP = p0+ p£OM + J3JNV + p.MRT + J3ACYC + s Where I
GDP = Gross Domestic Product measured as the real GDP value generated within the year.

COM = Average commission fee charged by the investment banks in Kenya;

INV = the total number of investment banks in Kenya within the year,

MRT = the total value of stocks traded or transacted within the year;

CYC = the trading cycle within the investment market to measure the microstructure of
investment markets;

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

Po = the regression model coefficient;

Pi - P4 = the regression model coefficients;

And e = the regression model error term or significance.

PRIMARY DATA

The study has been made using secondary data, which are obtained from annual reports and
statements of accounts.

SECONDARY DATA

The study is period for the annual reports and statement of accounts extended from the year
2018 to 2019.

ANALYTICAL TOOLS FOR THE STUDY

During the course of research for the researcher for analysis and interpretation of data is given
below has applied various tools.

 Investment Banking statement analysis

 Funds from operations
 Ratio analysis.
 Trend analysis

TOOLS FOR DATA COLLECTION:

The data so collected from various annual reports & financial Statements for 2 years. Been classified
& tabulated for better understanding & to give a complete picture at 1 place.

TOOLS FOR ANALYSIS:

The tabulated data has been analyzed thoroughly through various ratios and graphs, which is used.

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

LIMITATIONS
However, the study is also hedged with some limitations. This study is based on the secondary
data. Naturally, the study would have the weakness of this type of data.

 Financial statement analysis tools have some inherent limitations of financial

statements and limited Kotak Mahindra Bank Branches. This study has also suffered
from those limitations.
 The nature of financial statements for Kotak Mahindra Bank is historical. Here, analysis
and interpretation are made on those historical data, which tells only about the past
performance and the financial weakness of the bank.
 Change in accounting procedure by a firm often makes ratio analysis misleading.
 The analysis and interpretation are based on secondary data contained in the published
annual reports of Kotak Mahindra Bank for the study period.
 The study of financial performance can be only a means to know about the financial
condition of the company and cannot show a through picture of the activities of the
company.
 Further, the conclusions drawn from the study are applicable only to the Kotak
Mahindra Bank and not for other banks.

CONCLUSION
The balance-sheet along with the income statement is an important tool for investors and many
other parties who are interested in it to gain insight into a company and its operation. The
balance sheet is a snapshot at a single point of time of the company’s accounts- covering its
assets, liabilities and shareholder’s equity. The purpose of the balance-sheet is to give users an
idea of the company’s financial position along with displaying what the company owns and
owes. It is important that all investors know how to use, analyze and read balance-sheet. Profit
& Loss account tells the net profit and net loss of a company and its appropriation.

In the case of KOTAK MAHINDRA Bank, during fiscal 2018, the bank continued to grow and
diversify its assets base and revenue streams. Bank supports agriculture sector more by giving
loans under various schemes.

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

The comparative statement of profit & loss account shows the increases and decreases in the
items of profit & loss account and balance sheet during 2014 to 2018. It shows that all items
are increased mostly but increase in this year is less than as compared to increase in previous
year except few items.
Trend analysis of profit & loss account and balance sheet shows the percentage change in items
of profit & loss account and balance sheet i.e. percentage change during 2014 to 2018. It shows
that all items are increased mostly but increase in this year is less than as compared to increase
in previous year except few items. In profit & loss account, all items like interest income, non-
interest income, interest expenses, operating expenses, operating profit, net profit is increased
but in mostly cases it is less than from previous year but in some items like interest income,
interest expenses percentage increase is more. Some items like tax, depreciation is decreased.
Similarly in balance sheet all items like advances, cash, liabilities, deposits, and borrowings
are increased. Percentage increase in some item is more than previous year and in some items
it is less.
Ratio analysis of financial statement shows that the bank is good in risk taking ability, dealing
probable loan defaults, ability to borrow and repay money, management efficiency and
liquidity. But the bank is just fair in maintaining asset quality and profitability.

The cash flow statement shows that net increase in cash generated from financing activities is
much more than the previous year but cash generated from investing activities is negative in
all the five years. The cash generated from operating activities is negative in the last two years.
There is increase of Rs.251.05 crores in cash & cash equivalents from previous year. Therefore
analysis of cash flow statement shows that cash inflow is more than the cash outflow in
KOTAK MAHINDRA Bank.
Thus, the ratio analysis and trend analysis and analysis of cash flow statement and comparative
statement shows that KOTAK MAHINDRA Bank’s financial position is fair. Bank’s
profitability is increasing but not at high rate. Bank’s liquidity position is good because bank
invests more in liquid assets than the current assets. The KOTAK MAHINDRA Bank needs to
pay attention on commercial activities like promoting more schemes for industrial customers
etc. Bank’s position is stable.

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 PROJECT REPORT ON INVESTMENT BANKING AND FINANCIAL
MARKETS IN KOTAK MAHINDRA BANK

BIBILOGRAPHY
Books Referred:
 Accountancy. R.K. Mittal, A.K.Jain.
 Financial Management Investment Banking References- Theory and Practice.
Shashi.K.Gupta, R.K. Sharma.
 P.N. VARSHNEY “Banking Law And Practices” Sultan Chand & Sons
 SUNDRAM & VARSHNEY “Banking, Theory Law And Practices” Sultan Chand &
Sons
 DR. S. N. MAHESHWARI “Principles Of Accounting” Sultan Chand & Sons
 Advanced Accounting, revised edition june 2010-ICAI
Internet websites:
 www.kotakmahindrabank.in
 www.moneycontrol.com
 www.money.rediff.com
 www.wikipedia.org
 www.google.com
 www.scribd.com
 www.managementparadise.com
 www.rbi.org.in

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