0% found this document useful (0 votes)
102 views25 pages

Submitted By: - Submitted To:-Mrs Dalbir Kaur

This document provides an overview of merchant banking. It defines merchant banking as dealing with financial advice and services for large corporations and wealthy individuals, rather than regular banking services for the general public. Merchant banks primarily invest their own capital in client companies and provide services like mergers and acquisitions. The document outlines the origin and development of merchant banking in Italy, France, London, and India. It also describes the various services offered by merchant banks such as corporate counseling, project counseling, portfolio management, and credit syndication. Finally, it discusses regulations for merchant banks in India and some of the key foreign players in the Indian merchant banking sector.

Uploaded by

Gurvinder Arora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
102 views25 pages

Submitted By: - Submitted To:-Mrs Dalbir Kaur

This document provides an overview of merchant banking. It defines merchant banking as dealing with financial advice and services for large corporations and wealthy individuals, rather than regular banking services for the general public. Merchant banks primarily invest their own capital in client companies and provide services like mergers and acquisitions. The document outlines the origin and development of merchant banking in Italy, France, London, and India. It also describes the various services offered by merchant banks such as corporate counseling, project counseling, portfolio management, and credit syndication. Finally, it discusses regulations for merchant banks in India and some of the key foreign players in the Indian merchant banking sector.

Uploaded by

Gurvinder Arora
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 25

SUBMITTED BY:_ SUBMITTED TO:MRS DALBIR KAUR RAVI SINGLA 120426202 SECTION-E

Definition: Banking
Business activity of an financial advisory that accepts deposits

and channels those deposits into lending activities, either directly or through capital markets. Few Services Offered: a) Savings/Current account b) Home/Personal loan c) Mutual fund d) collect cheques, drafts & notes.

Merchant Banking: Origin


Merchant Banking came into existence in 17th & 18th century in

Italy & France. Merchant banking in the modern era started from London; Merchants started to finance the foreign trade through acceptance of bill. Merchant Banking officially came to India through Grindlays Bank in 1967. Recognized the requirements of upcoming class of Entrepreneurs for diverse financial services.

Merchant Banking: Contd.


Few Other Institutes who joined the bandwagon:-

Citibank Setup its merchant banking division in Indian in

1970. Indian banks Started banking Services from 1972. State bank of India started the merchant banking division in 1972. Many other banks came after this like ICICI, Canara Bank, UCO bank etc.

About Merchant Banking


Bank that deals mostly in international finance, long-term loans

for companies and stock underwriting. Merchant banking primarily involves financial advice and services for large corporations and wealthy individuals. Merchant banks do not provide regular banking services to the general public. Merchant banks invest their own capital in client companies & provide services for mergers and acquisitions.

Contd.
A merchant bank is sometimes said to be a wholesale bank, or

in the business of wholesale banking. Its because merchant banks tend to deal primarily with other merchant banks and other large financial institutions. As of today there are 135 Merchant bankers who are registered with SEBI, India. This includes Private, Public & Foreign players.

Services:
Corporate counseling.
Project counseling. Working capital finance. Portfolio Management. Restructuring strategies. Credit Syndication. Lease Financing.

Some Other Services.

Services contd.
Corporate Counseling:
Set of activities undertaken for efficient running of an

enterprise. Identifying areas of growth & diversification. Guiding clients on aspects like locational factors, organizational size, investment decision, choice of product.

Contd.
Project counseling:
Its a part of corporate counseling & deals with analysis of

project viability .
Comprises of preparation of project report & deciding finance

pattern for cost of project.


Filling up of application form with significant information for

obtaining funds.

Services contd.
Working Capital Finance:
Meeting the day-to-day expenses of an enterprise is working

capital finance.
Assessment of working capital requirements.

Preparing necessary application to negotiation for sanction of

appropriate credit facilities.

Portfolio Management.
Making decisions for the investment of cash resources of a

corporate enterprise in marketable securities.


Decides quantum, timing & type of security to be bought. Help in achieving maximum return with minimum risk by

proper combination of securities.

Restructuring Strategies.
Deals with Mergers & Acquisitions.
Its a specialized service of Merchant bankers wherein they act

as middle-men in negotiating between two companies. Offers expert evaluation regarding identification organizations with matching characteristics. Obtaining approvals from various authorities.

Services contd.
Credit Syndication:

Relates to activities connected with credit procurement & project financing. Estimates total cost of the project Drawing up of financial plan which conforms requirements of promoters & their collaborators. Selecting institutions for participation for financing.

Lease Financing.
Its an important alternative source of financing a capital

outlay. Involves letting out assets on lease for use by the lessee for a particular period of time. Providing advice on viability of leasing & choice of favorable rental structure.

Other Services:
Relief to Sick Industries: Rejuvenating old lines & ailing units by appraising

technology, process etc.


Evolving rehabilitation packages acceptable to financial

institutions/banks.
Exploring possibilities of mergers & acqusitions.

Other Services contd.


Mutual Funds:
Its collective investment scheme that pools money from

several investors & channels them into productive investments. Investing money in diversified portfolio of shares & debentures. Assuring Investors return in terms of capital appreciation.

Difference b/w Commercial & Merchant banks


Merchant Banking
Commercial Banking
Catering needs of common man. Anyone can open an A/c. Catering needs of corporate

Less exposed to risk.


Related to secondary markets. Its asset oriented. Plays the role of financers.

firms. It cannot be done. More exposed to risk. Related to Primary markets. Its management oriented. Plays different roles like underwriting, portfolio etc.

Merchant Banking
Advantages:
Merchant banks perform functions that cannot be carried out by businesses on their own. Merchant banks have access to traders, financial institutions, and markets that companies or individuals could not possibly reach. By using their skills and contacts, merchant banks can get the best

Disadvantages:
Merchant banks are really only for large corporate customers, or extremely wealthy smaller businesses owned by individual clients. Not all deals carried out by merchant banks meet with unqualified success. There is always risk attached to the kinds of deal that merchant banks undertake.

possible deals for their clients.

Institutes offering Merchant Banking


Public Sector
SBI capital markets ltd Punjab national bank Bank of Maharashtra

Private Sector
ICICI Securities Ltd Axis Bank Ltd Bajaj Capital Ltd

Karur Vysya bank ltd


State Bank of Bikaner and

Reliance Securities Limited


Kotak Mahindra Capital

Jaipur. IFCI financial services ltd.

Company Ltd Yes Bank Ltd

MERCHANT BANKING REGULATIONS :

Certificate from SEBI is a must.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 CAPITAL ADEQUACY NORMS : Category I : Rs. 5 crores

Category II

: Rs.50 lakhs

Category III : Rs.20 lakhs Category IV : Nil

GUIDELINES FOR MERCHANT BANKERS :

SEBIs authorization is a must to act as merchant bankers.Authorisation criteria include


Professional qualification in finace,law or business management

Infrastructure like office space,equipment and man power


Capital adequacy Past track of record,experience,general reputation and fairness in all

transactions
Every merchant banker should maintain copies of balance sheet,Profit and loss account,statement of financial position

Half-yearly unaudited result should be submitted to SEBI


Merchant bankers are prohibited from buying securities based on the unpublished price sensitive information of their clients

SEBI has been vested with the power to suspend or cancel the authorisation in case of violation of the guidelines Every merchant banker shall appoint a Compliance Officer to monitor compliance of the Act

SEBI has the right to send inspecting authority to inspect books of accounts,records etc of merchant bankers
Inspections will be conducted by SEBI to ensure that provisions of the regulations are properly complied An initial authorisation fee,an annual fee and renewal fee may be collected by SEBI A lead manager holding a certificate under category I shall accept a minimum underwriting obligation of 5% of size of issue or Rs.25 lakhs whichever is less

SOME PROBLEMS OF MERCHANT BANKERS

SEBI stipulates high capital adequacy norms for authorisation which prevents young,specialised professionals into merchant banking business

Non co-operation of the issuing companies in timely allotment of securities and refund of application of money etc.. is another problem
Yet merchant banking is vast but should develop adequate expertise to provide a full range of merchant banking services

Key Foreign Players


Goldman Sachs (India) Securities Pvt. Ltd.
Morgan Stanley India Company Pvt. Ltd. Barclays Securities (India) Pvt. Ltd. Bank Of America Citigroup Global Markets India Pvt. Ltd. DSP Merrill Lynch Ltd.

Thank You.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy