Urethane resin having hydrophilic polar groups (mercapto groups) shows excellent dispersibility of magnetic powder when used as a binder for magnetic recording media. Magnetic recording media prepared by using the binder are excellent in surface-smoothness and durability. The mercapto groups contained in the magnetic layer react with isocyanate groups in the polyisocyanate to form thiourethane bonds to leave no hydrophilic polar groups, i.e., mercapto groups, and thus is excellent in moisture- and heat-resistance as well.The resin and the binding agent are advantageously used in the production of magnetic recording media, for example, magnetic tape, magnetic disc, etc.