GUIDELINES FOR MERCHANT BANKERS -SEBI’s authorization is a must to act as Merchant Bankers. 5 Crores.Category II : Rs.50 Lakhs.Category III : Rs.20 Lakhs.Category IV : Nil. They are of four types:Category I merchant bankers : Can act as Issue Managers.Category II merchant bankers : Can act only as Co –Managers.Category III merchant bankers : Can act as co-managers but cannot undertake Portfolio Management.Category IV merchant bankers :Can merely act as Consultant or Advisor to issue of capital. Merchant Banking Services in India -MERCHANT BANKING REGULATIONS IN INDIA -Certificate from SEBI is a must. TYPES OF MERCHANT BANKS -ORGANISATIONAL STRUCTURE - FUNCTIONS AND SERVICES -Issue Management.Project Counselling.Underwriting of Public Issues.Portfolio Management.Mergers and Takeovers.Loan Syndication.Offshore Finance.Rehabilitation of Sick Units.Capital Restructuring Services.Private Placement.Foreign Direct Investment.Working Capital Finance.Credit Accepting and Bill Discounting. NEED AND IMPORTANCE -Growth of Primary Markets.Purchasing Securities.Capital Flow.Promoting Financial Surplus.Coordinating activities to the Share Issue.Complying with Rules and Regulations. City Bank ( 1970).SBI (1972).Other Banks – Private Banks, Foreign Banks.Financial Institutions – Commercial Banks, Development Banks.įEATURES -Combination of Banking and Consultancy Services.Acts as a Financial Engineer.Provides variety of Services. Thereafter, these merchants formed an association which is now called “Merchant Banking and Securities House Association.”Growth of Merchant Banks in India -Grindlays Bank (1967). Later on, they helped government of under developed countries to raise long term funds.
The term merchant banking originated from the London who started financing foreign trade through acceptance of bills. is known Merchant Banking.” “It is a fee-based business, where the bank assumes market risks but no long-term credit risk.”“It is a vision, investment banking is a technique.”“It is a conversion of dreams into reality with the help of money.” DEFINITIONS -“A kind of financial institution which provides a variety of services such as investment banking, management of customer’s securities, portfolios, insurance, acceptance of bills, etc. Gives assistance to set up new industrial ventures. Advisory services to existing units for expanding and diversifying production. INTRODUCTION & MEANING -Business of money.Intermediary Channel.
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