HDFC Bank, one of the largest private sector banks in India, is entering the highly competitive and hugely profitable business of investment banking. It has obtained the requisite merchant banking licence from Sebi and is in the process of setting up its team, sources said.

An HDFC Bank spokesperson confirmed that it has got Sebi approval for merchant banking operations, but declined to elaborate.

Although one of the leading players in the banking segment in India, the 14-year-old HDFC Bank had left the investment banking space untouched fort the last few years. It had its share of experience in this space in the late 1990s, but faced with the bad market conditions had surrendered the licence to Sebi.

On the other hand, most of the other private sectors banks, including ICICI Bank, Kotak Mahindra Bank and several other not-so-large players, have substantial presence in this space. With its entry into the investment banking space, HDFC Bank plans to leverage its strong client base in the wholesale banking business and plans to compete with the established large players.

Also given its relationship with its clients, “lead generation for the investment banking business will be easier,” an industry source said.

Seen from the other side, since it already has banking relationship with companies large and small, it is also in a position to offer those companies its investment banking services as well.

-India Times

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