merchant banking and merchant banker functions

1. Merchant
Banking
Submitted by:
Shreya Dikshit
Piyush Yadav

2. Introduction
MERCHANT BANKING
Merchant Bankingis a combination of BANKING and CONSULTANCY
SERVICES. It provides consultancy to its clientsfor financial,marketing,
managerialand legal matters.
Merchant Bankingprovides a wide range of services for starting until
running a business. It acts as FINANCIAL ENGINEER for a business.

3. Functions of Merchant Banking

4. Merchant Bank
Merchant Bankis a company that deals mostly in INTERNATIONAL
FINANCE, Businessloans for companies and UNDERWRITING. These
banksare experts in INTERNATIONAL TRADE, which makes them
specialistsin dealing with multinationalcorporations.
A Merchant Bankmay perform some of the same services as an
INVESTMENT BANK, but it does not provide regular banking services to
the general public.

5. Difference Between Investment Bank
And Merchant Bank
InvestmentBank MerchantBank
 Investment Bank is a financial institution
that helps to government corporate, HIGH
NET WORTH (HNI)INDIVIDUAL in raising
capital.
 Investment Banks areengaged in the
UNDERWRITING OF SHARES AND
ISSUANCE OF SHARES.
 Investment Banks assist companies in
the ACQUISITION AND MERGERS.
 Merchant Bank is a combination of
BANKING AND ADVISORY SERVICES.
 Merchant Banks are well known in
INTERNATIONAL FINANCIAL ACTIVITIES.
 Merchant Banks NOT assist companies
in ACQUISITION AND MERGERS.

6. Merchant Banking in India
Need for Merchant Bankingwas felt with RAPID GROWTH in number
and size of ISSUES made in PRIMARY MARKET.
 Merchant Bankingservices were started by foreign banks, namely
NATIONAL GRINDLAYS in 1967 and CITY BANK in 1970.
 Merchant Bankingservices were offered along with other traditional
banking services.
 SBI was first Indian bank to set up Merchant BankingDivision in
1972.

7. Main Services Provided By Merchant
Banks
 Project Counselling
 Underwriting
 Portfolio Management
Managers to issue
 Advising on Mergers and Take-Overs
Arranging Offshore finance
 Corporate Reconstructing
Non-Resident Investment

8. Merchant Banker
According to SEBI Merchant BankersRules, 1992 & The Notification of
the Ministry of Finance;
The merchant banker is:-
“Any person who is engaged in the business of issuemanagement either
by making arrangements regarding selling, buying or subscribing to
securities as manager-consultant,advisor or rendering corporate
advisory services in relation to suchissue management.”

9. Qualities of a Merchant Banker
Ability to
Analyse
Abundant
Knowledge
Innovative
Approach
Integrity
Capital
Market
Familiarity

10. Functions of a Merchant Banker
ProjectPromotionServices.
ProjectFinance.
ManagementandMarketingofNew Issues.
UnderwritingofNew issues.
LeasingServices.
CorporateAdvisoryServices.
ProvidingVentureCapital.
InvestmentManagementor PortfolioManagementservices.
ProvidingassistancefortechnicalandfinancialcollaborationsandJoint
ventures.
Managementofanddealingincommercial papers.
Investmentservicesfor Non-ResidentIndians.

11. Conclusion
Hence,wecanconcludethattheneedforMerchantBankingisfeltinthewake
ofHUGEPUBLIC SAVINGS lyinguntapped.
MerchantBankers canplayhighlysignificantrolein MOBILISING FUNDSOF
SAVERSTO INVESTIBLE CHANNELSassuringpromisingreturnson
investmentsandthus,canassistinmeetingthewideningdemandfor
investiblefundsfor economicactivity.
Withgrowthofmerchantbankingprofessioncorporateenterprises,
undertakingEXPANSION,MODERNISATION,DIVERSIFICATION ofexisting
enterprises.Thisreinforcestheneedfor a vigorousroletobeplayedby
merchantbanking.