1. By Naman Malpani Naresh Kumar Pallavi Keerthi Phanindra Reddy
Merchant Banking By
Naman Malpani
Naresh Kumar
Pallavi
Keerthi
Phanindra Reddy

2. Merchant Bank
In banking, a merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and to wealthy individuals. The term can also be used to describe the private equity activities of banking.

3. Nature of Merchant banking
It is a skill based activity which involves serving every financial need of a client.
Skills primarily include Issue management and underwriting.
Recent sophistication has led to widening of its activities to private placement, bought out deals, buy back of shares and mergers and takeovers.

4. Functions Management of Debt and Equity offerings
Placement and distribution
Corporate advisory services
Project advisory services
Loan syndication
Providing venture capital financing

5. Origin
Merchant banking activity formally initiated into Indian capital markets when Grind lays bank received license in
It started off with capital issues, recognized the need of emerging entrepreneurs.
Diverse financial services ranging from production planning and system design to market research.

6. Growth in India
State bank of India has started merchant banking division in 1972.
Initially its objective was to render corporate advice and assistance to small and medium entrepreneurs.
Commercial banks and foreign development financial institutions have organized them through separate divisions.

7. Contd..
The Indian merchant bankers have developed to such an extent where they can provide all the following services:
Project counseling
Pre investment activities
Feasibility studies
Project reports
Designing capital structure and many more.

8. Need for regulation
Regulations assure raising resources at low cost, effectively and easily and ensure high degree of protection of investors interest.
These regulations provide the merchant bankers a dynamic and competitive market with high standard of professional competence.
These regulations promote the primary market which is fair, efficient and flexible.

9. Registration
Category 1: to carry on any activity of issue management which will consist of preparation of prospectus and other information relating to issue.
Category 2: to act as adviser, consultant, co-manager, underwriter, portfolio manager.
Category 3: to act as underwriter, adviser and consultant to an issue.
Category 4: to act as only adviser or consultant to an issue.

10. Requirements for granting certificate
Shall be a body corporate other than NBFC
Has the necessary infrastructure to deliver the required activities
Should have minimum two experienced employees to conduct business.
The director or principal officer should not have any litigation with the securities market which has an adverse bearing.
Director or principal officer should not be convicted of any offence
Should have professional qualification from reputed institute in finance.

11. Obligations and responsibilities
Merchant banker should maintain proper books of accounts, records and submit half yearly, annual financial statements to SEBI within stipulated period of time.
No merchant banker should be associated to 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 their professional assignment.

12. Contd..
Every merchant banker must submit himself to the inspection by SEBI when required for and submit all books of accounts
Every merchant banker must disclose information to the SEBI when required
All of them must abide by the code of conduct prescribed.

13. Norms Make all efforts to protect the interests of investors
Maintain high standards of integrity, dignity and fairness in the conduct of its business
Fulfill its obligations in a prompt, ethical and professional manner
Endeavour to ensure that inquiries from investors are adequately dealt with, grievances of investors are redressed, advising investors of further steps when complaint is not remedied properly

14. Contd..
Ensure that adequate disclosures are made to the investors in a timely manner in accordance with the applicable regulations and guidelines
Ensuring that copies of the prospectus, offer document, letter of offer or any other related literature is made available to investors
Not indulging in any unfair competition, such as weaning away the clients on assurance of higher advantageous price