merchant banking prashant
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Prashant Kale [25]
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Meaning In banking, merchant bank is a financial institution
primarily engaged in offering financial services and
advice to corporations and wealthy individuals on howto use their money.
The term can also be used to describe the private equity
activities of banking.
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Merchant Banks - Concept No statutory or any authoritative definition.
For many, it means management of capital issues of
companies. Some confuse this with investment banking and an issue
house.
Yet another group of persons mean it to what a merchant
banker does. In this situation, let us try to settle for a workable
definition of this term.
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Definition In the Indian context, understood to be non-fund basedand non-banking services
Merchant bankers -neither merchants nor bankers Rule 2(e) of SEBI (merchant bankers) Rules 1992, defines merchant banker means any person who is engaged in the
business of issue management either by makingarrangements regarding selling, buying or subscribing tosecurities as manager-consultant, advisor or rendering
corporate advisory services in relation to such issuemanagement
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Merchant banking Vs Commercial
banking
A bank can undertake merchant bankingbusiness, but a Merchant Bank can notundertake banking business.
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Merchant Banking Vs Investment
Banking Thin difference
investment banker does the following Selling issues of securities of companies,
Underwriting functions, Helps in mergers and acquisitions, Investment advises, Finding buyers for private placement, Dealing in securities, etc.
Hence, similarities between MB and IB. Generally,investment advises and dealing in securities are notperformed by Merchant Banker.
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Merchant Banking in IndiaMerchant Banking Divisions
IndianBanks
FinancialInstitutions
PrivateMerchantBankers
Subsidiary Division inBank
ForeignBanks
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Merchant Banking and Corporates
Objectives ofMerchantBanking
Guidance
Project Formulations
Implementation
Modernization
Diversification
Mobilizing Resources
Raising Working Capital
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Activities of Merchant BankersWide range of activities broadly classified under two
heads - counseling and procuring finance
Some of the important functions of a MerchantBankers are Project counseling or reinvestment studies for investors Syndication of loans and project finance Issue management Provision of working capital Portfolio Management Foreign Currency Loans
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SERVICES RENDERED BY
MERCHANT BANKERS Project finance advice
Project appraisal
Capital restructuring
Issue management
Loan syndication
Foreign currency finance
Investment management
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Continued.. Mutual funds
Lease finance
Bill discounting
Mergers and acquisitions
Working capital finance
Government consents
Arranging fixed deposits
Corporate counseling
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Continued.. Underwriting
Non-resident investment
Relief to sick industrial units
Hire purchase
Money market operations
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AUTHORISED ACTIVITIES OF
MERCHANT BANKERS Issue Management
Corporate Adviser Services relating to Issue
Underwriting
Portfolio Management
Managers, Consultants or Advisors in the
Issue
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Categories of merchant bankers Category I Those authorised to act in the capacity of
led manager/co-manager/advisor or consultant to anissue, portfolio manager and underwriter to an issue.
Category II those authorised to act in the capacity ofco-manager or consultant to an issue or portfoliomanager.
Category III
those authorised to act only in thecapacity of advisor or consultant to an issue.
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Association of merchant bankersAMBI registered as a self regulatory organization
under sec. 25 of the companies act 1956
Reasons to form AMBI-
No control on prices of new issues
Prices decided by merchant bankers
Investors have become more demanding
Demands for stringent regulation of the merchantbankers.
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Punjab National Bank The Bank is registered with SEBI as Category I Merchant
Banker for providing all the major Merchant Banking
services.
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Canara Bank
One of the leading Merchant Bankers in India
Offering specialized services to Banks, PSUs, State owned
Corporations, Local Statutory bodies and corporate sector.
They are SEBI registered Category I Merchant
Banker/Underwriter to carry on Issue 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 ServiceBranches to handle "Capital Market" related assignments.
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SPECTRUM OF SERVICES Equity Issue (Public/Rights) Management
Debt Issue Management
Private Placements
Project Appraisals
Monitoring Agency Assignments
IPO Funding
Security Trustee Services
Agriculture Consultancy Services
Corporate Advisory Services
Mergers and Acquisitions
Buy Back Assignments
Share Valuations
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