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Marketing of Merchant Bank Services
Marketing of Merchant Bank Services
Marketing of Merchant Bank Services
DEFINITION
NOTIFICATION OF MINISTRY OF FINANCE DEFINES MERCHANT BANKER AS ANY PERSON WHO IS ENGAGED IN BUSINESS OF ISSUE MANAGEMENT EITHER BY MAKING ARRANGEMENTS REGARDING SELLING,BUYING OR SUBSCRIBING TO THE SECURITIES AS MANAGER,CONSULTANT,ADVISOR OR RENDERING CORPORATE ADVISORY SERVICE IN RELATION TO SUCH ISSUE MANAGEMENT. THERE IS NO UNIVERSAL DEFINITION OF MERCHANT BANKING. IT IS AN INSTITUTION WHICH COVERS A WIDE RANGE OF FUNCTIONS SUCH AS MANAGEMENT OF CUSTOMER SERVICES, PORTFOLIO MANAGEMENT, CREDIT SYNDICATION, ACCEPTANCE CREDIT, COUNSELLING, INSURANCE ETC.
ORIGIN OF MERCHANT BANKING MERCHANT BANKING ORIGINATED THROUGH ENTERING OF LONDON MERCHANTS IN FINANCING FOREIGN TRADE THROUGH ACCEPTANCE OF BILLS. LATER THESE MERCHANTS ASSISTED GOVT. IN RAISING LONG TERM FUNDS THROUGH FLOTATION OF BONDS. LATER ON THEY EXTENDED THEIR ACTIVITIES TO SYNDICATION OF LONG TERM/SHORT TERM FINANCE, UNDERWRITING, ACTING AS REGISTRARS, DEBENTURE TRUSTEES, PORTFOLIO MANAGERS, NEGOTIATING AGENTS FOR MERGERS AND TAKEOVERS. THUS THE INSTITUTION OF MERCHANT BANKERS CAME TO STAY.
BEGINNING
TO BEGIN WITH MERCHANT BANKING SERVICES WERE OFFERED ALONGWITH OTHER TRADITIONAL BANKING SERVICES. IN MID 80S BANKING REGULATION ACT WAS AMENDED PERMITTING COMMERCIAL BANKS TO OFFER A WIDE RANGE OF FINANCIAL SEERVICES THROUGH THE SUBSIDIARIES. SBI WAS THE FIRST AND THEN ICICI,BANK OF INDIA, BANK OF BARODA,CANARA, PUNJAB,UCO BANK FOLLOWED. THE MERCHANT BANKING GAINED PROMINENCE DURING 1083-84 DUE TO NEW ISSUES BOOM
PORTFOLIO MANAGEMENT
IT REFERES TO INVESTMENT IN DIFFERENT KINDS OF SECURITIES ISSUED BY DIFFERENT COMPANIES AND SECURITIES ISSUED BY GOVERNMENT PORTFOLIO MANAGER HAS TO CONDUCT REGULAR MARKET AND ECONOMIC SURVEYS REGARDING 1) MONETARY AND FISCAL POLICIES OF GOVT. 2) FINANCIAL STATEMENTS OF DIFFERENT COMPANIES 3) MOVEMENT OF SHARE MARKET 4) CHANGING PATTERN OF INDUSTRIES 5) COMPETITION WITHIN INDUSTRY * PORTFOLIO MANAGEMENT HAS BECOME NECESSARY FOR MANY NEW INVESTORS.
LESS THAN 50 CRORES2, 50 TO 100 CRORES 3, 100 TO 200 CRORES 4, 200 CRORES TO 400 CRORES 5, ABOVE 5 CRORES 5 OR MORE AS PRESCRIBEB BY THE SEBI. DUTIES AND RESPONSIBILITIES OF LEAD MANAGERS 1) AGEEMENT WITH ISSUING COMPANY- WHICH IS TO BE SUBMITTED TO SEBI AT LEAST ONE MONTH BEFORE THE ISSUE OPENS. 2) EVERY MERCHANT BANKER MUST HAVE REGISTRATION OF SEBI 3) LEAD MANAGER CANNOT UNDERTAKE WORK IF THE COMPANY IS ITS ASSOCIATE.
4) IF MORE THAN ONE LEAD MANAGEERS THEN RESPONSIBILITIES OF EACH MUST BE CLEARLY DEFINED IN THE AGREEMENT 5) THE LEAD MANAGER IS UNDER OBLIGATION TO ACCEPT MINIMUM UNDERWRITING OBLIGATION OF 5 % OF THE ISSUE OR 25 LAKHS WHICHEVER IS LESS. 6) DUE CARE AND DILIGENCE IN VERIFYINHG THE PROSPECTUS.OR LETTER OF OFFER7 LEAD MANAGER HAS TO GIVE DUE DILIGENCE CERTIFICATE THAT PROSPECTUS OR LETTER OF OFFER IS IN CONFORMITY WITH DOCUMENTS RELEVANT TO ISSUE, DISCLOSURES ARE TRUE,FAIR, ADEQUATE AND ALL LEGAL REQUIREMENTS ALL DULY COMPLIED WITH.. 7) EVERY LEAD MANAGER HAS TO SUBMIT ALL PARTICULARS OF ISSUE,PROSPECTUS TO THE SEBI AT LEAST TWO WEEKS BEFORE THE DATE OF FILING WITH THE REGISTRAR OF COMPANIES OR REGIONAL STOCK EXCHANGE OR BOTH
8) ANY SUGGESTIONS MADE BY SEBI MUST BE PROPERLY INCORPORATED 9) IN CASE OF DEVELOPMENT THE LEAD MANAGER HAS TO ENSURE THAT UNDERWRITERS CONTRIBUTE THE AMOUNT OF THEIR LIABLITY 10) EVERY LEAD MANGER IS RESPONSIBLE FOR TIMELY REFUND OF ANY EXCESS APPLICATION MONEY 11) IT IS HIS DUTY TO MAIL; SHARE/DEBENTURE CERTIFICATE IMMEDIATELY ON ALLOTMENT OR INFORM IT TO THE DEPOSITORY PARTICIPANT .