High underwriting fees likely to remain elusive in India

Mumbai

NO one told Indian banks about the capital market conspiracy. While advisers in the United States, Japan and China are being accused of "tacit collusion" for charging high underwriting fees, their Indian counterparts are working for almost free. Advisers selling up to US$2.3 billion of stock for State Bank of India, the country's largest lender, may take home a token one rupee - equivalent to US$0.015.

Overzealous foreign banks, who were keen to build market share and contribute to global league-table rankings, were first to work for so little. As they seek to ditch such practices, local outfits are taking up the great giveaway. IIFL quoted a nominal one-rupee fee to advise on SBI's placement to institutional shareholders, IFR, a Thomson Reuters publication, reported on May 25. Others were asked to match that rate. Bank of America Merrill Lynch and Deutsche Bank are part of the final group on the mandate.