Investment Bankers Urged to Prioritize Long-Term Client Relationships

Investment Bankers Should Think Beyond Deals: SEBI’s Ashwani Bhatia Sends a Strong Message

Mumbai – At a time when Indian capital markets are evolving rapidly, Ashwani Bhatia, Whole-Time Member of the Securities and Exchange Board of India (SEBI), has offered a pointed reminder to the investment banking community: short-term gains shouldn’t come at the cost of long-term trust.

Speaking at the 13th annual convention of the Association of Investment Bankers of India (AIBI) in Mumbai, Bhatia urged bankers to focus on relationship-driven engagement with clients, rather than viewing IPO mandates or fundraising assignments through a transactional lens.

“If a company approaches a bank and pays a 30% fee, it has to account for that cost again next year. That’s not a sustainable model,” Bhatia said, referring to the current practice of high fee structures—sometimes reaching as high as 20 to 30 percent—for listing services.

A Market Flush with Long-Term Capital—But It Needs Responsible Gatekeepers

India, Bhatia noted, isn’t short on capital. Long-term, patient funds are available—and willing—to back companies with strong fundamentals. And SEBI, for its part, has relaxed several regulatory norms to make capital markets more accessible, especially for businesses that may not fit the conventional mould of large, profitable enterprises.

The regulator’s latest reforms aim to streamline the IPO process, making it easier for fundamentally sound issuers—regardless of their size—to enter the market. However, that ease of access, Bhatia emphasized, comes with a need for greater accountability and moderation from the intermediaries facilitating these listings.

SMEs and Startups Deserve a Bigger Platform

Bhatia also took the opportunity to make a broader appeal: don’t let a few bad apples spoil the whole basket. He acknowledged that not every small company or startup has a clean record, but stressed that isolated missteps shouldn’t be used as a reason to deny the wider SME and startup ecosystem a fair shot at raising capital.

Startups in cities like Bangalore, Hyderabad, Pune, and Gurgaon, he said, are hungry for capital and eager to be part of the formal market structure. Their energy, innovation, and drive are key to the market’s long-term dynamism, and SEBI wants to create a regulatory environment that encourages their participation—not one that sidelines them due to legacy barriers.

Key Messages from SEBI’s Address

Rethink the Fee Model: Charging steep listing fees may earn short-term revenue but could alienate smaller firms trying to tap the public markets.
Long-Term Relationships Matter: Investment bankers should think beyond deal closures and consider the broader value of trust-based, enduring relationships with clients.
Capital is Not the Constraint: There’s no shortage of patient capital in India right now—what’s needed is a bridge between quality issuers and this funding.
Reforms for the Right Reasons: SEBI’s relaxed norms are meant to support credible businesses that might otherwise be left out due to size, not to lower the bar for compliance or governance.
Bring Startups into the Fold: The next wave of growth will likely come from India’s SMEs and startups. Their inclusion will be vital to market health and depth.

A Clear Signal from SEBI

Ashwani Bhatia’s remarks offer more than just regulatory insight—they reflect a broader shift in how SEBI envisions the future of Indian capital markets. It’s a vision rooted in fairness, inclusion, and trust. And while reforms have made the IPO process more accessible, SEBI is also putting the onus on intermediaries—especially investment bankers—to act responsibly and ethically in how they support clients.

The message is simple but profound: if India’s capital markets are to remain vibrant, *they must be built on relationships—not just transactions.