INTRODUCTION

Financial services are an important component of financial system. The smooth

functioning of financial system depends upon the range of financial services extended by
the providers. Financial services in India have witnessed remarkable changes in the
recent past after the implementation of Liberalization, privatization and globalization.
Funds are tapped from the capital market to finance various mega industrial projects. In
attracting public savings, merchant bankers play a vital role as specialized agencies. The
resources raising functions remains to be the primary business of a merchant banker. The
primary market holds the key to rapid capital formation, growth in industrial productions
and exports. There has to be accountability to the end use of funds raised from the
market. The increase in the number of issues and amount raised the number of merchant
bankers. Therefore, the field became highly competitive market where it requires a
specialized skill in handling the situation. The merchant bankers have a social
responsibility to in building an industrial structure in India.
Merchant bankers assist corporate in raising capital. They assist in issue of
Shares, syndicating loans, public issue of debentures. They do not provide funds.
They only assist. They also actively arrange working capital, appraisal
Projects scrutinize & persuade merger proposals.
In BRITAIN merchant bankers & investment bankers are synonymous.
In the U.S., Merchant bank means as investment bank which is well-equipped to handle
multinational corporations.
In INDIA merchant bankers is a body corporate who carries on any activity of the issue
management, which consist of preparing prospectus & other information relating to the
issue. Merchant banks in India are not allowed to conduct any business other than that
related to securities market. There is no official category in investment banking

DEFINITION:
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In banking, a merchant bank is a financial institution primarily engaged in offering

financial services and advice to corporations and wealthy individuals on how to use their
money. The term can also be used to describe the private equity activities of banking.
According to Cox, D. merchant banking is defined as, merchant banks are the financial
institutions providing specialist services which generally include the acceptance of bills
of exchange, corporate finance, portfolio management and other banking services.
The Notification of the Ministry of Finance defines a merchant banker as, any person
who is engaged in the business of issue management either by making arrangements
regarding selling, buying or subscribing to securities as manager, consultant, advisor or
rendering corporate advisory service in relation to such issue management.
In short, merchant bankers assist in raising capital and advice on related issues.

History and Origin of Merchant Banking In India

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ORIGIN
Merchant banking originated through the entering of London merchants in foreign trade
through acceptance of bill. Later, the merchants assisted the Government of under
developed countries in raising long terms through floatation of bonds in London money
market. Over a period they extended their activities to domestic business of syndication
of long term and short term finance, underwriting of new issues, acting as registrars and
share transfer agents, debenture trustees, portfolio managers, negotiating agents for
mergers, takeovers etc.
Merchant Banking in India Historical Perspective:
Till 18th century moneylenders, moneychangers, village merchants (maharanis), &
saucers performed the function of banks & merchant banks. They also issued &
discounted bills of exchange (handiest) & bank draft. They gave loans on mutual trust, on
mortgage of lands, ornaments & other property. JAGAT SHETH (1720-1773AD,
BENGAL) HABIB & SONS which is now HABIB BANK (founded in 1941, now is in
PAKISTAN). These were the organized merchant bankers in recent history of INDIA.
Merchant Banking is an activity that includes corporate finance activities, such as advice
on complex financings, merger and acquisition advice (international or domestic), and at
times direct equity investments in corporations by the banks.
Merchant banks are private financial institution. Their primary sources of income are
PIPE financings and international trade. Their secondary income sources are consulting,
Mergers & Acquisitions help and financial market speculation. Because they do not
invest against collateral, they take far greater risks than traditional banks. Because they
are private, do not take money from the public and are international in scope, they are not
regulated.
The reason that businesses should develop a working relationship with a merchant bank
is that they have more money than venture capitalists. Their advice tends to be more
pragmatic than venture capitalists. It is rare for a merchant bank to fail. The last major
failure was Barings Bank (1992)

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It failed because of unsupervised trading of copper futures contracts and buybacks. When
the Dot Com Bubble burst in 2001, scores of venture capital firms failed. The greatest
merchant bank failure in history was the Knights Templar. After the Crusades, the Order
became immensely wealthy controlling and funding the trade between the Middle East
and Western Europe. They foolishly loaned money to the French Government. To
understand Merchant Banks, you should know something of their history.
The banking practices evolved from the financing structure of the Silk Road Trading that
predates the Roman Empire.
The basic financing structure was the advance payment for goods by merchant bankers at
a great discount to the delivery value of those goods. In the case of Italy and then
Germany, wheat was the product. The merchant banks purchased the wheat soon after
planting. They accepted the risk of crop failure.
As the British Empire expanded in the 18th and 19th Centuries, merchant banks
prospered in London. For instance, merchant bankers funded Canadas Hudson Bay
Company. This period saw the rise of such merchant banks as Schroders, Warburgs or
Rothschilds. Amsterdam benefited from the trade created by the Dutch East Indian
Company. Today, North American merchant banks have taken the form of "boutiques"whereby, each offers its own specialized services. The hallmarks of these merchant bank
boutiques are that they typically charge fees payable in cash and/or the client's stock for
each service rendered. You can find a merchant bank that meets any reasonable set of
needs.

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Merchant Banking in India Post Independence:

In 1967, RBI issued its first merchant banking license to grind lays started with
management of capital issues, production planning, system design and also market
research. It provides management consulting services as well. Citibank setup its merchant
banking division in 1970. its scope includes assisting new entrepreneur, evaluating new
projects, raising funds through borrowing and issuing equity. Indian banks started
banking services as a part of multiple services they offered to clients from 1972. State
bank of India started the merchant banking division in 1972. In the initial years the
objective was to render corporate advice and assistance to small and medium
entrepreneurs. Merchant banking activities are organized and undertaken in several
forms. Commercial banks and foreign development finance institutions have organized
them through formation of division; nationalized banks have formed subsidiaries
companies and share brokers and consultancies constituted themselves into public ltd.
Co. or registered themselves as private ltd. companies. Some of them have equity stake of
foreign merchant bankers.

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Merchant Bank
A merchant bank deals with the commercial banking needs of international finance, long
term company loans, and stock underwriting. A merchant bank does not have retail
offices where one can go and open a savings or checking account. A merchant bank is
sometimes said to be a wholesale bank, or in the business of wholesale banking. This is
because merchant banks tend to deal primarily with other merchant banks and other large
financial institutions.
The most familiar role of the merchant bank is stock underwriting.
A large company that wishes to raise money from investors through the stock market can
hire a merchant bank to implement and underwrite the process. The merchant bank
determines the number of stocks to be issued, the price at which the stock will be issued,
and the timing of the release of this new stock. The merchant bank files all the paperwork
required with the various market authorities, and is also frequently responsible for
marketing the new stock, though this may be a joint effort with the company and
managed by the merchant bank. For really large stock offerings, several merchant banks
may work together, with one being the lead underwriter.
By limiting their scope to the needs of large companies, merchant banks can focus their
knowledge and be of specific use to such clients. Some merchant banks specialize in a
single area, such as underwriting or international finance.
Many of the largest banks have both a retail division and a merchant bank division. The
divisions are generally very separate entities, as there is very little similarity between
retail banking and what goes on in a merchant bank.

Although your life is probably affected every day in some way by decisions made in a
merchant bank, most people reading this article are unlikely ever to visit or deal directly
with a merchant bank. Merchant banks operate behind the scenes and away from the
spotlight.

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Importance and Need of merchant banking

Important reason for the growth of merchant banking has been developmental activity
throughout the country, exerting excess demand on the sources of funds for
ever expanding

industry and

trade,

thus,

leaving

widening

gap

under

bridged between the supply and demand of inventible funds. All Indian financial
institutions and experienced resources constraint to meet the ever increasing demands for
funds from the corporate sector enterprises. In the circumstances corporate sector had the
only alternative to avail of the capital market services for meeting their long-term
financial requirements through capital issues of equity and debentures. With the growing
demand for funds there was pressure on capital market that enthused the commercial
banks, share brokers and financial consultant firms to enter into the field of merchant
banking and share the growing capital markets. With the result, all the commercial banks
in nationalized and public sector as well as in private sector including the foreign banks
in India have opened their merchant banking windows and are competing in this field.
There has been a mushroom growth of financial consultancy firms and broker firms
doing advisory functions as well as managing public issues in syndication with other
merchant bankers.
Notwithstanding the above facts, the need of merchant banking institutions is felt in the
wake of huge public savings lying still untapped. Merchant banks can play highly
significant role in mobilizing funds of savers to investible channels assuring promising
return on investments and thus can help in meeting the widening demand for investible
funds for economic activity.
With the growth of merchant banking profession corporate enterprises in both public and
private sectors would be able to raise required amount of funds annually from the capital
market to meet the growing requirements for funds for establishing new enterprises,
undertaking expansion/modernization/diversification of the existing enterprises. This
reinforces the need for a vigorous role to be played by merchant banks.

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Merchant banks have been procuring impressive support from capital market for the
corporate sector for financing their projects. This is evidenced from the increasing
amount raised form the capital market by the corporate enterprises year after year.
In view of multitude of enactments, rules and regulations, guidelines and offshoot press
release instructions brought out by the government from time to time imposing statutory
obligations upon the corporate sector to comply with all those requirements prescribed
therein, the need of skilled agency existed which could provide counseling in these
matters in a package form. Merchant bankers, with their skills, updated information and
knowledge, provide this service to the corporate units and advise them on such
requirements to be complied with for raising funds from the capital market under
different enactments viz. Companies Act, Income-tax Act, Foreign Exchange Regulation
Act, Securities Contracts (Regulation) Act and various other corporate laws and
regulations. Merchant bankers advise the investors of the incentives available in the form
of tax reliefs, other statutory relaxations, good return on investment and capital
appreciation in such investment to motivate them to invest their savings in securities of
the corporate sector.

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Role of Merchant Banker

The role of merchant banker is dynamic in the wake of diverse nature of merchant
banking services. Merchant bankers dynamism lies in promptly attending to the
corporate problems and suggest ways and means to solve it. The nature of merchant
banking services is development oriented and promotional to help the industry and trade
to grow and survive. Merchant banker is, therefore, dedicated to achieve this objective
through his dynamism. He is always awake to renew his skills, develop expertise in new
areas so as to equip himself with the knowledge and techniques to deal with emerging
new problems of corporate business world. He has to keep pace with the changing
environment where government rules, regulations and politics affecting business
conditions frequently change; where science and technology create new innovations in
production processes of industries envisaging immediate renovations, diversifications,
modernizations or replacements of existing plant and machinery or other equipments
putting new demands for finances and necessitating overhauling of the capital structure of
the firms. Merchant banker has to think and devise new instruments of financing
industrial projects. He has to assume wider responsibilities of saving industrial units from
going sick and guiding industries to be setup in industrially backward areas to eliminate
regional imbalances in industrial development of the country.
He has to guide the wider section of the community possessing surplus money to invest
in corporate securities and other productive investment channels. He has to help the
industry in different forms to ensure that it runs risk free and devoid of uncertainty by
assisting the promoters with his knowledge and skills to resolve the problems being faced
by them. He has to watch the interest and win over the confidence of the government, its
agencies, along with the entrepreneurs, the investors and the whole community. He must
bridge the communication gap between different sections and resolve the problem being
faced in different areas concerned with the business world. To discharge the above role, a
merchant banker has to be dynamic.

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The growth of Merchant banking in India

Formal merchant activity in India was originated in 1969 with the merchant banking
division setup by the Grind lays Bank, the largest foreign bank in the country. The main
service offered at that time to the corporate enterprises by the merchant banks included
the management of public issues and some aspects of financial consultancy. Following
Grind lays Bank, Citibank set up its merchant banking division in 1970.The division took
up the task of assisting new entrepreneurs and existing units in the evaluation of new
projects and raising funds through borrowing and equity issues. Management consultancy
services were also offered. Merchant bankers are permitted to carry on activities of
primary dealers in government securities. Consequent to the recommendations of
Banking Commission in 1972, that Indian banks should offer merchant banking services
as part of the multiple services they could provide their clients, State Bank of India
started the Merchant Banking Division in 1972. In the initial years the SBIs objective
was to render corporate advice and assistance to small and medium entrepreneurs.
The commercial banks that followed State Bank of India were Central Bank of India,
Bank of India and Syndicate Bank in 1977.Bank of Baroda, Standard Chartered Bank and
Mercantile Bank in 1978 and United Bank of India, United Commercial Bank, Punjab
National Bank, Canara Bank and Indian Overseas Bank in late 70s and early 80s.
Among the development banks, ICICI started merchant banking activities in 1973
followed by IFCI (1986) and IDBI (1991).

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Organizational setup of merchant bankers in India

In India a common organizational setup of merchant bankers to operate is in the form of
divisions of Indian and foreign banks and financial institutions, subsidiary companies
established by bankers like SBI, Canara Bank, Punjab National Bank, Bank of India, etc.
Some firms are also organized by financial and technical consultants and professionals.
Securities and Exchange Board of India has divided the merchant bankers into four
categories based on their capital adequacy. Each category is authorized to perform certain
functions. From the point of organizational setup Indias merchant banking organizations
can be categorized into four groups on the basis of their linkage with parent activity. They
are:
(A) Institutional Base
Where merchant banks function as an independent wing or as subsidiary of various
private/Central Governments/State Governments financial institutions. Most of the
financial institutions in India are in public sector and therefore such setup plays a role on
the lines of government priorities and policies.
(B) Banker Base
These merchant bankers function as division/subsidiary of banking organization. The
parent banks are either nationalized commercial bank or the foreign banks operating in
India. These organizations have brought professionalism in merchant banking sector and
they help their parent organization to make a presence in capital market.
(C) Broker Base
In the recent past there has been an inflow of qualified and professionally skilled brokers
in various stock exchanges of India. These brokers undertake merchant banking related
operations also like providing investment and portfolio management services.

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(D) Private Base

These merchant banking firms are originated in private sector. These organizations are
the outcome of opportunities and scope in merchant banking business and they are
providing skill-oriented specialized services to their clients. Some foreign merchant
bankers are also entering either independently or through some collaboration with their
Indian counterparts. Private sector merchant banking firms have come up either as the
sole proprietorship or public limited companies. Many of these firms were in existence
for quite some times before they added a new activity in the form of merchant banking
services by opening new divisions on the lines of commercial banks and All India
Financial Institutions.

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1. Formation of the Business Organization

SEBI act, 1992 does not prescribe any specific form of business organization to carry on
the activities as merchant banker. However, the types of organizations are listed below:
a.

Sole proprietorship

b.

Partnership firm

c.

Hindu Undivided Family (HUF)

d.

Corporate Enterprises

e.

Co-operative Society

Generally it is preferred that the Merchant Banking outfit be a registered company.

Merchant Banks are generally setup as subsidiary companies of banks (Public or Private).
For example, SBI caps, ICICI Securities etc.
2. Adoption of a viable business plan
All the basic tests required to find out whether the business to be undertaken is viable or
not are also applicable to a Merchant Banking setup. Capital adequacy, profitability,
growth opportunities and current market size are some of the factors which need to be
looked into.
3. Registration of Merchant Bankers
a) Application for grant of certificate
An application for grant of a certificate needs to be made to SEBI .

The application can be made for any one of the following categories of the merchant
banker namely:-

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Category I, that is

(i) to carry on any activity of the issue management, which will inter-alia consist of
preparation of prospectus and other information relating to the issue, determining
financial structure, tie-up of financiers and final allotment and refund of the subscription;
and
(ii) To act as adviser, consultant, manager, underwriter, portfolio manager.

Category II, that is, to act as adviser, consultant, co- manager, underwriter, portfolio
manager;

Category III, that is to act as underwriter, adviser, consultant to an issue;

Category IV, that is to act only as adviser or consultant to an issue.

To carry on the activity as underwriter or portfolio manager a separate certificate of

registration needs to be obtained from SEBI.
b.

Application to conform to the requirements

The application should conform to all the requirements under the SEBI guidelines,
otherwise it may be rejected.
c.

Furnishing of information, clarification and personal representation

The Board may require the applicant to furnish further information or clarification
regarding matters relevant to the activity of a merchant banker for the purpose of disposal
of the application. The applicant or its principal officer may appear before the Board for
personal representation.

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d.

Consideration of application

The Board shall take into account for considering the grant of a certificate, all matters,
which are relevant to the activities relating to merchant banker and in particular the
applicant complies with the following requirements, namely:

The applicant shall be a body corporate other than a non- banking financial
company

The merchant banker who has been granted registration by the Reserve Bank of
India to act as a Primary or Satellite dealer may carry on such activity subject to
the condition that it shall not accept or hold public deposit

The applicant has the necessary infrastructure like adequate office space,
equipments, and manpower to effectively discharge his activities

The applicant has in his employment minimum of two persons who have the
experience to conduct the business of the merchant banker

A person directly or indirectly connected with the applicant has not been granted
registration by the Board;

The applicant fulfils the capital adequacy requirement is as follows

The capital adequacy requirement should not be less than the net worth of the person
making the application for grant of registration. The networth shall be as follows,

Category

Minimum Amount

Category I

Rs. 5, 00, 00, 000

Category II

Rs. 50, 00, 000

Category III

Rs. 20, 00, 000

Category IV

Nil

The applicant, his partner, director or principal officer is not involved in any litigation
connected with the securities market which has an adverse bearing on the business of

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the applicant and have not at any time been convicted for any offence involving moral
turpitude or has been found guilty of any economic offence

The applicant has the professional qualification from an institution recognised by the
Government in finance, law or business management

e.

Grant of certificate to the applicant is in the interest of investors.

Procedure for Registration

The Board on being satisfied that the applicant is eligible shall grant a certificate. On the
grant of a certificate the applicant shall be liable to pay the fees as prescribed.
f.

Payment of fees and the consequences of failure to pay fees

Every applicant eligible for grant of a certificate shall pay such fees in such manner and
within the period specified.
Where a merchant banker fails to pay the Annual fees as provided in Schedule II, the
Board may suspend the registration certificate, whereupon the merchant banker shall
cease to carry on any activity as a merchant banker for the period during which the
suspension subsists.
The Merchant Bank can commence business on acquisition of a Certificate of
Registration from the SEBI after completion of the above mentioned formalities.

Main Objectives Of Merchant Bankers

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Merchant bankers render their specialized assistance in achieving the main

objectives which are presented below:

To carry on the business of merchant banking, assist in the capital formation, manage
advice, underwrite, provide standby assistance, securities and all kinds of investments
issued, to be issued or guaranteed by any company, corporation, society, firm, trust
person, government, municipality, civil body, public authority established in India.

The main object of merchant banker is to create secondary market for bills and
discount or re-discount bills and acts as an acceptance house.

Merchant bankers another objective is to set up and provide services for the venture
capital technology funds.

They also provide services to the finance housing schemes for the construction of
houses and buying of land.

They render the services like foreign exchange dealer, money exchange, and
authorized dealer and to buy and sell foreign exchange in all lawful ways in
compliance with the relevant laws of India.

They will invest in buying and selling of transfers, hypothecate and deal with dispose
of shares, stocks, debentures, securities and properties of any other company.

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Obligations and Responsibilites

Merchant bankers have the following obligations and responsibilities.

Merchant banker should maintain proper books of accounts, records and submit half
yearly/annual financial statements to the SEBI within stipulated period of time.

No merchant banker should associate with another merchant banker who is not
registered in SEBI.

Merchant bankers should not enter into any transactions on the basis of unpublished
information available to them in the course of their professional assignment.

Every merchant banker must submit himself to the inspection by SEBI when required
for and submit all the records.

Every merchant banker must disclose information to the SEBI when it requires any
information from them.

All merchant bankers must abide by the code of conduct prescribed for them.

Every merchant banker who acts as lead manager must enter into an agreement with
the issuer setting out mutual rights, liabilities, obligations, relating to such issues with
particular reference to disclosures allotment, refund etc.

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Code of Conduct
According to the 13 Regulation of the SEBI of 1992 (Merchant bankers), every
merchant banker should comply with following codes of conduct. They are:

The merchant banker must observe high integrity and fairness in all his dealings.

He shall render at all times high standard of services, exercise due diligence, exercise
independent professional judgement.

If necessary, he must disclose to his clients the possible source of conflict of duties
and interests.

The merchant banker should not indulge in unfair practice or unfair competition with
other merchant bankers.

He should not make any exaggerated statement about his capacity or achievement.

He should always Endeavour to give the best possible advise and prompt efficient and
cost effective service.

He should maintain the secrecy of all the confidential information received during the
course of service to his client.

He should not engage in the creation of a false market or price rigging or

manipulation.

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Guidelines of SEBI
After the obligations of the CCI, the place was occupied by a legal organ called as
Securities and Exchange Board of India. The issue of capital and pricing of issues by
companies has become free of prior approval. The SEBI has issued guidelines for the
issue of capital by the companies. The guidelines broadly covers the requirement of the
first issue by a new or the first issue of a new company set up by the existing company,
the first issue by the existing private companies and public issues by the existing listing
companies. The SEBI is the most powerful organization to control and lead both the
primary market and secondary market.
The SEBI has announced the new guidelines for the disclosures by the Companies
leading to the investor protection. They are presented below:

If any Companys other income exceeds 10 per cent of the total income, the details
should be disclosed.

The Company should disclose any adverse situation which affects the operations of
the Company and occurs within one year prior to the date filing of the offer document
with the Registrar of Companies or Stock Exchange.

The Company should also disclose the information regarding the capacity utilization
of the plant for the last 3 years.

The Promoters of the Company must maintain their holding at least at 20 per cent of
the expanded capital.

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The minimum application money payable should not be less than 25 per cent of the
issue price.

The company should disclose the time normally taken for the disposal of various
types of investors grievances.

The Company can make firm allotments in public issues as follows:

Indian mutual funds (20%),

The Company should disclose the safety net scheme or buy back arrangements of the
shares proposed in public issue. This scheme is applicable to a limited number of 500
shares per allottee and the offer should be valid for a period of at least 6 months from
the date of dispatch of securities.

According to the guidelines, in case of the public issues, at least 30 mandatory

collection centres should be established.

According to the SEBI guidelines regarding rights issue, the Company should give
advertisements in not less than two news-papers about the dispatch of letters of offer.
No preferential allotment may be made along with any rights issue.

The Company should also disclose about the fee agreed between the lead managers
and the Company in the memorandum of understanding.

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Difference between
Investment banks and Merchant banks
Merchant banks and investment banks, in their purest forms, are different kinds of
financial institutions that perform different services. In practice, the fine lines that
separate the functions of merchant banks and investment banks tend to blur. Traditional
merchant banks often expand into the field of securities underwriting, while many
investment banks participate in trade financing activities.
In theory, investment banks and merchant banks perform different functions.
Pure investment banks raise funds for businesses and some governments by
registering and issuing debt or equity and selling it on a market. Traditionally,
investment banks only participated in underwriting and selling securities in large blocks.
Investment banks facilitate mergers and acquisitions through share sales and provide
research and financial consulting to companies.
Traditionally,

investment

banks did

not

deal

with

the

general

public.

Traditional merchant banks primarily perform international financing activities

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such as foreign corporate investing, foreign real estate investment, trade finance and
international transaction facilitation.
Some of the activities that a pure merchant bank is involved in may include issuing letters
of credit, transferring funds internationally, trade consulting

As a general rule, investment banks focus on initial public offerings (IPOs) and large
public and private share offerings. Merchant banks tend to operate on small-scale
companies and offer creative equity financing, bridge financing, mezzanine financing and
a number of corporate credit products.

While investment banks tend to focus on larger companies, merchant banks offer their
services to companies that are too big for ventureCapitalfirms to serve properly, but are
still too small to make a compelling public share offering on a large exchange. In order to
bridge the gap between venture capital and a public offering, larger merchant banks tend
Merchant banks still offer trade financing products to their clients. Investment banks
rarely offer trade financing because most investment banking clients have already
outgrown the need for trade financing and the various credit products linked to it.

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Merchant banks and Commercial banks

Merchant banks

Commercial banks

1) Assist in raising capital in the form of equity, Provide funds in the form of term
preference shares, and syndicated loan working loan and working capital.
capital instruments.
2) Advisor not financer.

Financing is the main business.

3) Do not accept chequable deposits.

Demand deposits are the key feature.

4) Mainly fees based business.

Mainly fund based business

5) Being advisors, they are closer to the Being

lenders,

they

are

more

customers and get to know risks of the cautions, assess risks in lending
transaction s properly. They work on risks proposal and cannot afford to be
shields i.e. mitigation measures

grossly relationship based and close

to the customer.

6) Most of work they get is about management Commercial banks majority business
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of equity issues in the capacity of lead manager, is of terms lending and bank deposits.
underwriter, piercing of issue, book running, and
liaisoning with SEBI.

Services of Merchant Bankers In India:Merchant bankers provide services as follows:

Business planning stage:

1)project feasibility study

Equity raising:

2)advice on capital structuring

3)preparation of prospectus and liaison
with SEBI
4)pricing decisions
5)marketing in the capacity of lead
managers
6)underwriters to the issue
7)post issue management

Debt raising:

8)assistance in ADR/GDR
9)management of debenture issue
10)preparation of bankable proposal and

Working capital raising:

syndication of loan
11)assistance in arranging optimal capital

Strategic advice:

finance
12)advice on mergers and acquisitions
13)corporate structuring advice

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SERVICES PROVIDED BY MERCHANT BANKS: (in detail)

The development activity through the country had exerted excess demand on the sources
of funds by the ever expanding industry and trade which could not be met by the All
India Financial Institutions. In these circumstances, the corporate sector enterprises had
the only alternative to avail themselves of the capital market services for meeting the
long-term fund requirements through capital issues of equity and debentures. The
growing demand for funds from capital market has enthusied many organizations to enter
into the field of merchant banking for managing the public issues.
The need of merchant banker is also felt in the wake of huge untapped public savings as
merchant bankers can play a highly significant role in mobilizing funds from savers to
invest in channels assuring promising return on investments and thus narrow down the
gap between demand for and supply of investible funds.
Merchant bankers not only provide advisory services to corporate enterprises but also
advise the investors of the incentives available in the form of tax relief and other statutory
obligations. Thus, the merchant bankers help industry and trade to raise funds, and the
investors to invest their saved money in sound and healthy concerns with confidence,
safety and expectation of higher yields.
Broadly a merchant banker can provide the following services:

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Corporate Counseling

Project Counseling And Pre-Investment Studies

Credit Syndication And Project Finance

Issue Management

Underwriting

Bankers

Portfolio Management

Venture Capital Financing

Leasing

Non-Resident Investment Counseling And Management

Acceptance Credit And Bill Discounting

Advising On Mergers, Amalgamations And Take-Over

Arranging Offshore Finance

Fixed Deposit Broking

Relief To Sick Industries

Lets take a brief look at each of these functions:

Corporate Counseling
It includes a whole range of financial services provided by a merchant banker to a
corporate unit a view to ensure better performance, maintain steady growth and create a
better image among investors.
It covers the entire field of merchant banking activities i.e., project counseling, capital
restructuring, portfolio management and the full range of financial engineering including
venture capital, public issue management, loan syndication, working capital, fixed
deposits, lease financing, acceptance credit, etc. However, the scope of corporate

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counseling is limited to suggestions and opinions leaving to the client to take corrective
actions for solving its corporate problems.
A merchant banker finds out the problems of enterprise, which shall include
organizational goals for the enterprise, size of the organization and operational scales,
choice of a product, pricing, etc, and suggests ways and means to solve those problems.

Project Counseling
Project counseling is an important merchant banking service which includes preparation
of project reports, deciding upon the financing pattern to finance the cost of the project,
appraising the project report with the financial institutions/banks.
Project reports are prepared to obtain government approval of the project, for procuring
financial assistance from financial institutions and banks, for ensuring market for the
proposed product, for planning public issues, etc.
Financing the project cost is an important aspect of project counseling. The two sources
of funds available to finance the project cost are internal sources of funds (or owners'
funds) which includes promoter's contribution and retained earnings; and external sources
of funds which refers to the borrowed funds in the form of loans from banks, private
investors and financial institutions and in the form of debentures from the public.
Merchant banker has to decide the financing mix of the internal and external sources of
funds keeping in view the rules, regulations and norms prescribed by the government or
followed by the term lending financial institutions.

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While rendering project counseling services, the merchant banker has to ensure that the
application forms for obtaining the funds from financial institutions are filled in with
relevant and appropriate information and before submitting the application, the merchant
banker has to appraise the project considering the various aspects as to the type of the
project, location, technical, commercial and financial viability of the project.

Credit Syndication
Once the client company has decided about the project proposed to be undertaken, the
next step is looking for the sources wherefrom the funds could be procured to implement
the project.
Merchant banker has to locate the sources of funds and comply the formalities required to
procure the funds. This service rendered by the merchant banker in arranging and
procuring credit from financial institutions, banks and other lending and investment
organizations for financing the clients' project cost or meeting working capital
requirement is referred to as loan syndication or credit syndication.
Credit syndication in case of domestic borrowings is with the institutional lenders and
banks. Long and medium term funds are obtained from the All India Financial
Institutions like IFCI, IDBI etc., state level financial bodies like SFC, SIDC etc.,
commercial banks, mutual funds etc. Short-term funds are also required by the firm for
purchase of raw materials, payment of wages, salaries etc. Sources of financing these
short term requirements or working capital needs can be from internal sources like
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internal accruals from working or operations and short term loans from friends and
relatives; or from external sources like short term borrowings from banks etc.

Under writing of public issue

A fully underwritten public issue spells confidence to the investing public, which ensures
a good response to the issue. Keeping this in view companies, which float a public issue
usually, desire a full underwriting of the issue.
Underwriting is only the guarantee given by the underwriter that in the event of under
subscription, the amount underwritten would be subscribed in proportion by the
underwriter. An underwriter of the issue gets the following benefits:

It earns a commission of the commitment given.

It earns the right to be appointed as bankers of that issue.

It expands its clientele by underwriting more and more issues.

Bankers to the Issue

The merchant banker can automatically become the banker to the issue in the
following cases:

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The bank is a broker to the company

It has given underwriting commitments.

It acts as a manger to the issue

The function of a banker to the issue is to accept application forms from the public
together with subscription money and transfer them to the account of the controlling
branch.

Portfolio Management
Portfolio refers to investment in different types of marketable securities or investment
papers like shared, debentures and debenture stocks, bonds etc. from different companies
or institutions held by individuals firm or corporate units.
Portfolio management refers to managing efficiently the investment in the securities held
by professionals to others.
Merchant bankers take up management of a portfolio of securities on behalf of their
clients, providing special services with a view to ensure maximum return by such
investments with a minimum risk of loss of return on the money invested in securities.
A merchant banker while performing the services of portfolio management has to enquire
of the investment needs of the client, the tax bracket, ability to bare risk, liquidity
requirements, etc. they should study the economic environment affecting the capital
market, study the securities market and identify blue chip companies in which money can
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be invested. They should keep record of latest amendment in government guidelines,

stock exchange regulations, RBI regulations, etc.

Advisory Services Relating To Mergers and Takeovers

A merger is defined as a combination of two or more companies into a single company
where one services and other looses their corporate existence. A merger is also defied as
an amalgamation wherein the shareholders of the combining companies become
substantially the shareholders of the company formed.
A takeover is referred to as an acquisition, which is the purchase, by one company of a
controlling interest in the share capital of another existing company.
Merchant bankers are the middlemen settling negotiations between the offered and the
offeror. Their role is specific and specialized in handling the mergers and taker over
assignments. Being a professional expert, the merchant banker is apt to safeguard the
interest of the shareholders in both the companies and as such his assistance is useful for
both the companies, i.e. the acquirer as well as the acquired company.

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Based on the purpose of business objective, the search of the acquirer company will start
for a merger partner company. If the objective of merger is growth oriented i.e. seeking
expansion in production and market segments, utilization of existing companies or
optimum utilization of resources, then the acquirer company will select a business related
company as a merger partner.
If the objective is diversification in production line or business activities, then it will
select a non-related company as a merger partner.
Once the merger partner is proposed the merchant banker has to appraise the
merger/takeover proposal with respect to financial viability and technical feasibility. He
has to negotiate with the parties and decide the purchase consideration and mode of
payment. He has to comply with the legal formalities like getting approval from the
Government/ RBI; drafting the scheme of amalgamation; getting approval of company
Board, financial institution, high court if required; arranging for the meeting etc.

Venture Capital Financing

Financing an emerging high-risk project is called venture capital financing. Many
merchant bankers are entering into this area by also financing viable upcoming projects.
The financing is by subscription to the equity capital, while repayment is by selling the
equity through stock market when the shares are listed.
Leasing
Is there another lucrative area of financing where merchant bankers are turning? Leasing
is a viable source of financing while acquiring capital assets. The services include
arrangement for lease finance facilities for leasing companies, legal; documents and tax
consultancy.
Non Resident Investment

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To attract NRI investments in the primary and secondary markets, the merchant bankers
provide investment advisory services to the NRIs in terms of identification of investment
opportunities, selection of securities, portfolio management, etc. they also take care of
operational details like purchase and sale of securities securing the necessary clearance
from RBI under FERA for repatriation of dividends and interest, etc.
Acceptance Credit and Bill Discounting
Though merchant bankers world over specialize in acceptance credit and bill discounting,
these services are not currently provided by merchant bankers in India the principal
reasoning being the lack of an active market for commercial bills.

Arranging Offshore Finance

The merchant bankers also help their clients in the following areas involving foreign
currency financing:

Financing Of Exports And Imports

Long Term Foreign Currency Loans

Joint Ventures Abroad

Foreign Collaboration Arrangements

The assistance rendered as in the case of financial services covers appraisals,

negotiations, compliance with procedural and legal aspects etc.

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Management of Fixed Deposits of Companies

Recently, merchants bankers have begun to structure and mobilize fixed deposits for
their corporate clients. They take care of the procedural and legal aspects, and also mange
the collection and subsequent servicing of the deposits. Advice with regard to the amount
to be raised, interest charges, terms of deposits and other related issues are also offered to
the client.
Relief to Sick Industries
The services offered by merchant bankers to sick industries can be summarized as
follows:

Assessment of capital requirements and counseling on capital restructuring;

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Appraisal of technological, environmental, financial and other factors causing

sickness;

Preparations of programs and packages for rehabilitation of sick units;

Providing necessary assistance where the rehabilitation package involves mergers or

amalgamation;

Obtaining necessary approval for implementation the rehabilitation package from the
statutory authorities;

Monitoring the implementation of the scheme of rehabilitation.

Qualities of merchant bankers:To be a successful merchant banker, following qualities are necessary:
1. Knowledge: Thorough understanding of technical issues related to business,
understanding of legal and statutory requirements, appreciation of business acumen;
financial expertise is a key thing a merchant banker must know. Delivery of his services
depends on his basic understanding of these issues.
2. Capital market familiarity: Merchant banker should be well versed with stock
markets, their movements. He should track imp happenings in the market on ongoing
basis.
3. Liasioning ability: Merchant bankers are required to liaison with SEBI, RBI, the
stock exchanges, depositories and other government authorities for public issue related
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duties. It is imperative that a merchant bank maintains excellent rapport with all of them
and also close relations even at informal levels. This only can see speedy and favorable
clearances by the authorities.
4. Innovation: Corporate may approach with unique requirements. Standard solutions
and products may not solve problems sometimes. Merchant bankers should do out of box
thinking and be able to do financial engineering. They can device new financial
instruments and get approved from the authorities. Innovation is required even to address
stringent legal requirements.
5. Integrity: Merchant banker has valuable and confidential information of its
customers. Merchants bankers should take utmost care that the information is not leaked
and also not consumed for the purpose other than for which it was disclosed to the
merchant banker.

Problems and hurdles:Not many but some problems are faced by Indian merchant bankers.
I.

Industry compartmentalization: company which is in merchant banking business

would have expertise in underwriting, hire purchase, leasing, and portfolio management,
money-lending. But RBI does not permit merchant banking firms to get into these
activities. So the same promoters have to setup different companies for different purposes.
Management cost increases and expertise pooling i.e. multiple use of same talent is not
possible.

II. Malafide practices: India corporate culture is bettering. but still many corporate have
excessively friendly approach. Favored allotment of shares, tampering with project
appraisal report to bankers is common. Corporate like to use merchant bankers for
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malafide intentions. This gives growth to more boutique fly-by-day firms. Giant
professional or multinational merchant bankers are cautions in their approach to Indian
market.
III.

Regulations: though regulations are much better now, there is still scope for further
improvement. Merchant bankers can be made more accountable and responsible.
Professional qualification focused on merchant banking is not available. Industry is not
well organized and all the players do not play the same tune. This is specifically evident
in comparison with insurance industry and mutual funds industry.

Scope for merchant banking in India:Scope for merchant banking depends upon size of the market, restriction-liberation,
banking policies, corporate culture, and corporate dynamics.
1.

Size and dynamics of the market: Indian market is growing. In fact India is one of

the largest emerging markets. Obviously, public issues, FDI, debt raising are on rise. Lots
of new and green fried projects are happening. Merchant bankers have lots space to
contribute.
2.

Restrictions-liberalization: more liberal the market is, more the things left to be

decided by the corporate. Merchant bankers assist in decision making and hence their

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scope increases. With significant market freedom, merchant bankers work has increased
many folds.
3.

Banking policies: RBI prefers that commercial banks do not indulge in merchant

banking business directly. They should setup a subsidiary for the purpose. This limits
scope of commercial banks and gives space to merchant bankers. This policy also results
in fair business practices. Some countries allow commercial bankers to get involved in
IPOs, placement of debentures, etc. Indian scenario is favorable to merchant bankers.
4.

Corporate culture: corporate can do project appraisal, strategic restructuring in

house as well. If the corporate prefer third-party independent assessment, then only they
will engage merchant bankers. Otherwise merchant bankers role is only statutory as in
issue management. India inc. apparently prefers and is happy with merchant bankers
work.
5.

Corporate dynamics: more happening in business gives more opportunities to

merchant bankers. Mergers, takeover acquisition, new Greenfield projects, fund raising
for government institutions, active money market are all providing better business
prospectus to merchant bankers.

Progress of Merchant Banking in India:Upto 1970, there were only two foreign banks which performed merchant banking
operations in the country. SBI was the first Indian commercial bank and ICICI the first
financial institution to take up the activities in 1972 and 1973 respectively. As a result of
buoyancy in the capital market in 1980s some commercial banks set up their
subsidiaries to operate exclusively in merchant banking industry. In addition, a number of
large stock broking firms and financial consultants also entered into business. Thus, by
the end of the end of 1980s there were 33 merchant bankers belonging to three major
segments viz., commercial banks, all India financial institutions, and private firms.
39 | P a g e

Merchant banking functions of these institutions was related only to management of new
capital issues.
Merchant banking industry which remained almost stagnant and stereotyped for over two
decades, witnessed an astonishing growth after the process of economic reforms and
deregulation of Indian economy in 1991. The number of merchant banks increased to 115
by the end of 1992-93 300 by the end of 1993-94 and 501 by the end of August, 1994. all
merchant bankers registered with SEBI under four different categories include 50
commercial banks, 6 all Indian financial institutions ICICI, IFCI, IDBI, IRBI, Tourism
Finance corporation of India, infrastructure Leasing and Financial Services Ltd. and
private merchant bankers.
In addition to Indian Merchant Bankers, a large number of reputed international Merchant
Bankers like Merrill Lynch, Morgan Stanley, Goldman Sachs, Jardie Fleming Kleinwort
Benson etc. are operating in India under authorization of SEBI. As a result of
proliferation, Indian Merchant
Bankers are faced with severe competition not only among themselves but also with the
well developed global players.

CURRENT AFFAIRS
RBI allows cash withdrawal from merchant banker terminals
Besides ATMs, customers can now also withdraw cash up to Rs1000 from terminals at
different merchant establishments, the Reserve Bank. As a further step towards enhancing
the customer convenience in using the plastic money, it has been decided to permit cash
withdrawals at POS (point of sale) terminals. To start with, this facility will be available
for all debit cards issued in India, up to Rs1000 per day," RBI said in a statement issued
here.

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The use of debit cards at POS terminals at different merchant establishments has been
steadily increasing, it said. This facility is available only against debit cards issued in
India.
At present cash withdrawal facility using plastic cards is available only at Automatic
Teller Machines (ATMs) with the number of ATMs in the country at 44,857. There are
4,70,237 POS terminals in the country.
This facility may be made available at any merchant establishment designated by the
bank and would be available whether the card holder makes a purchase or not.
Morgan Stanley makes i-banking comeback
The joint venture between JM Financial and Morgan Stanley was inked in 1997 and
formalized in 1999. The JV had investment banking operations other than equity broking,
research, wealth management and advisory and securities distribution operations. Post the
split, JM Financial acquired the investment banking company together with its
subsidiaries, which were engaged in fixed income, equity broking, wealth management,
advisory and distribution businesses of $ 20 million. The Indian partner sold its 49%
holding in JM Morgan Stanley Securities (JMSPL), the institutional equity broking
company to Morgan Stanley for $ 445 million.
Bulge bracket investment banking major, Morgan Stanley has re-entered investment
banking business on its own, after parting ways with JM Financial its former Indian
partner.

PNB aims profit of 7,500crore by 2013

The country's second largest public sector lender Punjab National Bank aims to double its
profit to Rs7,500 crore in the next four years.
"The bank has set a target to expand total business to Rs10crore and earn net profit of
Rs7,500 crore by 2013," said PNB Chairman and Managing Director K C Chakrabarty,
who is charge of Deputy Governor of RBI.
The growth driver would be better asset liability management, thrust on recovery, focus
on customers and financial inclusion, he had said. Besides, the bank plans to open new
line of businesses in the current fiscal including merchant banking subsidiary.
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PNB Investment Services aims to provide investment consultancy and merchant banking
services and would be operational in the next three months. Currently, these operations
are run by a division of the bank.
ICICI Bank to oversee mergers and acquisitions
ICICI bank and its merchant banking arm, ICICI Securities (I-Sec), have entered into an
agreement, whereby all M&A deals will be done out of ICICI Bank. The agreement goes
on to define an M&A deal as one which involves change in management control.
This arrangement replaces the earlier practice of both I-Sec and ICICI Bank working
together on M&A deals. Since a predominant number of people, who wish to be advised
on M&A, also look for acquisition finance, it was decided that the business should be
housed in the bank, I-Sec MD Madhabi Puri Buch told ET. Now, if a corporate is
seeking a sell mandate or a buy mandate, where the transfer of controlling interest takes
place, the deal will be done by ICICI Bank.
ICICI Bank had initially entered the investment banking space in 2006. Over the past
couple of years, both the bank and its subsidiary have been vying for deals. The new deal
has taken into effect between both the entities from April 1.

Birla Capital and Financial Services gets SEBI merchant banking license
Birla Capital & Financial Services Ltd has been granted a merchant-banking license by
the Securities and Exchange Board of India. The license will enable the company to offer
a wide range of on-shore investment banking advisory and underwriting services in the
Indian market.
The company, which is a part of the Yash Birla conglomerate, will initially concentrate on
regulated services like initial public offerings, takeover, buybacks, delisting and
valuations. It also offers non-regulated services like PE Syndication, M&A Advisory and
other corporate advisory.
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Birla Capital & Financial Services Ltd. is part of the 3,000-crore Yash Birla Group that
has diversified interest in sectors like auto & engineering, textiles & chemicals and power
& electrical, education & IT.
Primary market slowdown, affects merchant bankers wallet
The recent slowdown in the primary market has impacted not only investors but merchant
bankers as well, as there has been a significant decline of nearly 60 per cent in their
percentage fees so far this year.
"There is a clear drop in the merchant banking fees to Rs 216crore in comparison to Rs.
771crore for the calendar year 2007, indicating a drop of 57.9 per cent on annualized
basis," Nexgen Capitals, the merchant-banking arm of brokerage firm SMC Global
Securities.
Merchant bankers are those who advise the issuer about the public offer and manage the
issue.
The average percentage fees has declined to 1.21 per cent so far this year from 2.24 per
cent in 2007, the report added.
Reliance Power IPO of Rs 11,563 crore during this year with the merchant banking fee of
Rs 50.6 crore, amounting to 0.44 per cent of the issue size had a great bearing on this
trend.

Nomura launches its investing banking operations in India

Nomura Financial Advisory and Securities (India) Private limited ('Nomura India'), a
wholly-owned subsidiary of Nomura Holdings, Inc. ('Nomura'), has launched its equity
sales

and

trading

and

investment

banking

operations

in

India.

In October 2008, Nomura, a global investment bank, acquired the majority of Lehman
Brothers' employees in India, including the equities sales and trading, equity research,
fixed income liquid markets sales and trading, and investment banking teams.
By integrating the former Lehman Brothers India franchise and obtaining its merchant
43 | P a g e

banking licence and stock exchange memberships, Nomura India said in a statement it
has significantly expanded its capabilities in India through a wide range of onshore
financial solutions spanning securities brokerage, securities underwriting and advisory
services.

Association of merchant bankers in India (AMBI):

Association of merchant bankers in India is a professional non-profit company setup to
represent the industry. It is expected to set code of ethics and facilitate dialogue between
the industry and regulatory bodies. Training and awareness programs are also expected
from AMBI. Because of lack of support from the members and non-initiative from
SEBI/government, AMBI is dormant at present.
ARTICLES:AMBI-SEBI talks on SRO
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ENS ECONOMIC BUREAU

MUMBAI, May 8: The Association of Merchant Bankers of India (AMBI) is proposing
to have an exhaustive dialogue with the Securities and Exchange Board of India (SEBI)
on its functioning as a self-regulatory organization (SRO).
This follows a feeling among AMBI members that it is being sidestepped when decisions
relating to merchant bankers are being taken. AMBI was given SRO status in 1995, but it
has not really been officiating as one.
Recently the association was really piqued when SEBI asked one of its members to stop
taking up further assignments without so much as giving it any notice. AMBI feels that
the member should have been given a fair hearing and also feels that AMBI as the SRO
should have been informed about the decision. A committee has subsequently been set up
by AMBI to go into the matter. Then there was the issue of asking all merchant bankers to
furnish

details

of

employees

to

SEBI.

This

was

also

demanded

without

consulting/informing AMBI.
The association has already made its disappointment clear to SEBI and the proposed
dialogue is reportedly being undertaken to clear all misunderstandings.

EXAMPLE:-

MERCHANT BANKING SERVICES

INTRODUCTION
Canara Bank is also one of the leading Merchant Bankers in India, offering specialized
services to Banks, PSUs, State owned Corporations, Local Statutory bodies and corporate
sector.
Its SEBI registered Category I Merchant Banker / Underwriter to carry on Issue
45 | P a g e

Management (Public / Rights / Private Placement Issues), Underwriting, Consultancy and

Corporate Advisory Services etc.
They also hold SEBI registration Certificate to act as "Bankers to an Issue" with network
of exclusive Capital Market Service Branches to handle Capital Market" related
assignments.
They undertake "project appraisals" with resource raising plans from Capital Market/
Debt Markets and facilitate tie-ups with Banks / Financial Institutions and Potential
Investors.
Their uniqueness is extending services under single window concept covering the
following areas:

Merchant Banking

Commercial Banking

Investments

Bankers to Issue - Escrow Bankers

Underwriting

SPECTRUM OF SERVICES:Equity Issue (Public/Rights) Management

Debt Issue Management

Private Placements

Project Appraisals

Monitoring Agency Assignments

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IPO Funding

Security Trustee Services

Agriculture Consultancy Services

Corporate Advisory Services

Mergers and Acquisitions

Buy Back Assignments

Share Valuations

Syndication

ISSUE MANAGEMENT SERVICES:1.

Project Appraisal

2.

Capital structuring

3.

Preparation of offer document

4.

Tie Ups (placement)

5.

Formalities with SEBI / Stock Exchange / ROC etc.,

6.

Underwriting

7.

Promotion /Marketing of Issues

8.

Collecting Banker / Banker to an issue

9.

Post Issue Management

10.

Refund Bankers

11.

Handling of Dividend Warrant/Interest Warrant Payments

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12.

Debenture Trusteeship

Investment Criteria:A wide range of later stage opportunities are considered. Targeted companies include the
following characteristics:
1. Having weathered the start-up process and established a core business model that is
sustainable;
2. Proven management team;
3. If not already profitable, visibility to profitability within a 12-month period;
4. Having established business partnerships that give it a major position in a market
space;
5. Significant barriers to entry; and
6. Technology or business that is scalable with global applications.
They look for opportunities for synergistic consolidation and/or companies that are on the
verge of extraordinary growth.

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STATE BANK OF INDIA

SBIs Merchant Banking Group is strongly positioned to offer perfect financial solutions
to your business. They specialize in the arrangement of various forms of Foreign
Currency Credits for Corporate.
They provide the resources, convenience and services to meet your needs by arranging
Foreign Currency credits through:
Commercial loans
Syndicated loans
Lines of Credit from Foreign Banks and Financial Institutions
FCNR loans
Loans from Export Credit Agencies
Financing of Imports.
They are internationally the most Preferred Bank by Export Credit Agencies for
Guarantees in case of the Indian Clients or Projects.
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SBI being an Indian entity has no India exposure ceiling. Their Primary focus is On
Indian Clients. SBIs seasoned Team of professionals provides you with Insightful credit
Information and helps you Maximize the Value from the transaction.

PRODUCTS AND SERVICES

1] Arranging External Commercial Borrowings (ECB)
2] Arranging and participating in international loan syndication
3] Loans backed by Export Credit Agencies
4] Foreign currency loans under the FCNR (B) scheme
5] Import Finance for Indian corporates.

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PUNJAB NATIONAL BANK

Indias one of the Leading Nationalized Bank established in 1895, serving over
3.5crore customers through 4520 branches and 439 extension counters is the largest
amongst Nationalized Banks. The Bank has recently been ranked 21st among top 500
companies and 9th among top 50 brands by the Economic Times. All the Branches of the
Bank have been computerized. The Bank has a concept of "Any Time, Any Where
Banking" through the introduction of Centralized Banking Solution (CBS) and over 2511
offices have already been brought under its ambit.
The Bank is registered with SEBI as Category I Merchant Banker for providing all the
major Merchant Banking services. Our gamut of Merchant Banking services includes:

Issue Management Services to act as Book Running Lead Manager/Lead Manager

for the IPOs /FPOs/Right issues/Debt issues

Project appraisal

Corporate Advisory Services

Underwriting of equity issues

Banker to the Issue/Paying Banker

Refund Banker

Monitoring Agency

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Debenture Trustee

Marketing of the issue through a strong network of QIBs/HNIEs/Corporates and

Retail investor. The Bank itself is one of the major investor in the market having a
treasury of 45000 crores.

Their Software for handling the Refund Banker is one of the best systems in the industry.
Its unique features provides online payment of the instrument by our 2470 branches in

CONCLUSION
The merchant banker plays a vital role in channelising the financial surplus of the society
into productive investment avenues. Hence before selecting a merchant banker, one must
decide, the services for which he is being approached. Selecting the right intermediary
who has the necessary skills to meet the requirements of the client will ensure success.
It can be said that this project helped me to understand every details about Merchant
Banking and in future how its going to get emerged in the Indian economy. Hence,
Merchant Banking can be considered as essential financial body in Indian financial
system.
Market development is predicted on a sound, fair and transparent regulatory framework.
To sustain the growth of the market and crystallize the growing awareness and interest
into a committed, discerning and growing awareness and interest into an essential to
remove the trading malpractice and structural inadequacies prevailing in the market, and
provide the investors an organized, well regulated market.

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