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The smooth fu nctioning of financial system depends upon the range of financial services exten ded by the providers. Financial services in India has witnessed remarkable chang es in the recent past after the implementation of “Liberalization, privatization a nd globalization”. Funds are tapped from the capital market to finance various meg a industrial projects. In attracting public savings, merchant bankers play a vit al role as specialized agencies. The resources raising functions remains to be t he primary business of a merchant banker. The primary market holds the key to ra pid capital formation, growth in industrial productions and exports. There has t o 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. There fore, the field became highly competitive market where it requires a specialized skill in handling the situation. The merchant bankers have a social responsibil ity to in building an industrial structure in India. 1
Merchant Banking in India Merchant bankers assist corporate in raising capital. They assist in issue of Sh ares, 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 & investmen t bankers are synonymous. In the U.S., Merchant bank means as investment bank wh ich is wellequipped to handle multinational corporations. In INDIA merchant bank ers is a body corporate who carries on any activity of the issue management, whi ch consist of preparing prospectus & other information relating to the issue. Me rchant banks in India are not allowed to conduct any business other than that re lated to securities market. There is no official category in investment banking. 2
Merchant Banking in India DEFINITION: In banking, a merchant bank is a financial institution primarily eng aged in offering financial services and advice to corporations and wealthy indiv iduals on how to use their money. The term can also be used to describe the priv ate equity activities of banking. According to Cox, D. merchant banking is defin ed as, “merchant banks are the financial institutions providing specialist service s which generally include the acceptance of bills of exchange, corporate finance , portfolio management and other banking services”. The Notification of the Minist ry of Finance defines a merchant banker as, “any person who is engaged in the busi ness of issue management either by making arrangements regarding selling, buying or subscribing to securities as manager, consultant, advisor or rendering corpo rate advisory service in relation to such issue management”. In short, merchant ba nkers assist in raising capital and advice on related issues. 3
Later.Merchant Banking in India HISTORY AND ORIGIN OF MERCHANT BANKING ORIGIN Merchant banking originated through the entering of London merchants in f oreign trade through acceptance of bill. village merchants (maharanis). debenture trustee s. JAGAT SHETH (1720-1773AD. now is in PAKISTAN). Over a period they extended their activities to dom estic business of syndication of long term and short term finance. moneychan gers. portfolio managers. BENGAL) HABIB & SONS which is now HABIB B ANK (founded in 1941. and at times direct equity investm ents in corporations by the banks. They also issued & discounted bills of exchange (handiest) & ba nk draft. the merchants assisted the Gover nment of under developed countries in raising long – terms through floatation of b onds in London money market. underwriting of new issues. Merchant Banking is an activity that includes c orporate finance activities. negotiating agents for mergers. MERCHANT B ANKING IN INDIA-HISTORICAL PERSPECTIVE:Till 18th century moneylenders. They gave loans on mutual trust. such as advice on complex financings. acting as registrars and share transfer agents. merger and ac quisition advice (international or domestic). on mortgage of lands. & saucers performed the function of banks & merchant banks. ornaments & oth er property. 4 . These were the organized merchant ban kers in recent history of INDIA. takeovers etc.
The last major failure was Barings Bank (1992). Their secondary income sources ar e consulting. Anyone considering dealing wi th any merchant bank should investigate the bank and its managers before seeking their help. Modern merchant bank ing started in Italy during the 7th Century. The reason that businesses should develop a working relationship with a merchant bank is that they have more money than venture capitalists. When the Dot Com Bubb le burst in 2001. they take far greater risks than trad itional banks. They foolishly loaned money to the French Government. The greatest merchant bank failure in history was the Knights Templar. To a void repaying the money. Mergers & Acquisitions help and financial market speculation.Merchant Banking in India Merchant banks are private financial institution. Tho usands of monks lost their lives. 5 . After the Crusades. To understand Merchant Banks. King Louie had the Pope declare the Order heretics. It failed because of unsu pervised trading of copper futures contracts and buybacks. The banking practices evolved from the financing structure of the Silk Road Trading that predates the Roman Empire. Their advice tends to be more pragmatic than venture capitalists. the Order b ecame immensely wealthy controlling and funding the trade between the Middle Eas t and Western Europe. but France balanced its budget. It is rare for a merchant bank to fail. do not take money from the public and a re international in scope. Their primary sources of incom e are PIPE financings and international trade. scores of venture capital firms failed. they are not regulated. Beca use they do not invest against collateral. you should know something of their history. Because they are private.
For instance. In the case of Ita ly and then Germany. merchant bankers funded Canada’s Hudson Bay Company. the role of the merchant banker has been considerably broadened to include a composite of modern day skills. each offers its own specialized s ervices. merchant banks prospered in London. Today. This period saw the rise of such merchant banks as Schroders. Amsterda m benefited from the trade created by the Dutch East Indian Company. As the British Empi re expanded in the 18th and 19th Centuries. wheat was the product. In most countries today. North American merchant ba nks have taken the form of "boutiques"whereby. 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. financial and transactional. The merchant banks purchased the whe at soon after planting. Warburgs or Rothschilds. They accepted the risk of crop failure. 6 .Merchant Banking in India The basic financing structure was the advance payment for goods by merchant bank ers at a great discount to the delivery value of those goods. the national go vernment accepts the risk through government crop insurance. You can find a merchant bank that meets any reasonable set of needs. managerial. Since the 1 8th century. Such skills are inherently entrepreneu rial. They profited when they sold the wheat.
In the initial years the objective was to render corporate advice a nd assistance to small and medium entrepreneurs. Indian banks started banking services as a part of multiple services they offe red to clients from 1972. Commercial banks and foreign develop ment finance institutions have organized them through formation of division. evaluating new projects. Co. 7 . its scope includes assisting new entrepre neur. or registered themselves as p rivate ltd. companies. rasing funds through borrowing and issuing equity . RBI issued its first merchant banking license to grind lays started wit h management of capital issues. production planning. nat ionalized banks have formed subsidiaries companies and share brokers and consult ancies constituted themselves into public ltd. It provides management consulting services as well.Merchant Banking in India Merchant Banking in India – Post Independence: In 1967. Citibank setup its merchant banking division in 1970. State bank of India started the merchant banking divis ion in 1972. system design and also mark et research. Merchant banking activities are organized and undertaken in several forms. Some of them have equity stake of foreign merchant banker s.
The most familiar role of th e merchant bank is stock underwriting. several merchant banks may work together. or in the business of wholesa le banking. The merchant bank files all the paperwork required wit h the various market authorities. and the timing of the r elease of this new stock. A large company that wishes to raise mone y from investors through the stock market can hire a merchant bank to implement and underwrite the process.Merchant Banking in India MERCHANT BANK A merchant bank deals with the commercial banking needs of international finance . with one being the lead underwriter. though this may be a joint effort with the company and managed by the merchant bank. This is because merchant banks tend to deal primarily with other mer chant banks and other large financial institutions. 8 . the price at which the stock will be issued. For really large stock offerings. long term company loans. and stock underwriting. and is also frequently responsible for marketi ng the new stock. A merch ant bank is sometimes said to be a wholesale bank. A merchant bank does not have retail offices where one can go and open a savings or checking account. The merchant bank determines the number of stocks to be issued.
as there is very little similarity between retail banking and what goes on in a merchant bank. Some merchant banks sp ecialize in a single area.Merchant Banking in India By limiting their scope to the needs of large companies. Merchant banks operate behind the scenes and away from the spotlight. most people reading this article are unlikely ever to visit or deal directly with a merchant bank. Many of the largest banks have both a retail division and a merchant bank divisi on. such as underwriting or international finance. The divisions are generally very separate entities. Although your life is probably affected every day in some way by decisions made in a merchant bank. merchant banks can focu s their knowledge and be of specific use to such clients. 9 .
the need of merchant banking institutions i s felt in the wake of huge public savings lying still untapped. 10 . exerting excess demand on the sources of funds for e ver expanding industry and trade. With the result. Notwithstanding the above facts. All Indian financial institution s and experienced resources constraint to meet the ever increasing demands for f unds from the corporate sector enterprises. thus. Merchant banks c an play highly significant role in mobilizing funds of savers to investible chan nels assuring promising return on investments and thus can help in meeting the w idening demand for investible funds for economic activity. In the circumstances corporate secto r had the only alternative to avail of the capital market services for meeting t heir long-term financial requirements through capital issues of equity and deben tures. leaving a widening gap under bridged bet ween the supply and demand of inventible funds. With the growing demand for funds there was pressure on capital market th at enthused the commercial banks. There has been a mus hroom growth of financial consultancy firms and broker firms doing advisory func tions as well as managing public issues in syndication with other merchant banke rs. all the commercial banks in nationalized and public sector as well as in private sector including the foreign banks in India have opened thei r merchant banking windows and are competing in this field. share brokers and financial consultant firms t o enter into the field of merchant banking and share the growing capital markets .Merchant Banking in India Importance and need of merchant banking Important reason for the growth of merchant banking has been developmental activ ity throughout the country.
Merchant Banking in India With the growth of merchant banking profession corporate enterprises in both pub lic 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 establis hing new enterprises. rules and reg ulations. the need of skil led agency existed which could provide counseling in these matters in a package form. good return on investment and cap ital appreciation in such investment to motivate them to invest their savings in securities of the corporate sector. Merchant bankers. other statutory relaxations. Foreign Exchange Regulation Act. updated information and knowledge. Companies Act. guidelines and offshoot press release instructions brought out by the government from time to time imposing statutory obligations upon the corporate s ector to comply with all those requirements prescribed therein. Merchant bankers advise the investors of the incentives available in the fo rm of tax relief’s. with their skills. In view of multitude of enactments. Merchant banks have been procuring impressive support from c apital market for the corporate sector for financing their projects. Income-tax Act. This reinforces the need for a vigorous role to be played by merchant banks. Sec urities Contracts (Regulation) Act and various other corporate laws and regulati ons. pr ovide this service to the corporate units and advise them on such requirements t o be complied with for raising funds from the capital market under different ena ctments viz. This is evi denced from the increasing amount raised form the capital market by the corporat e enterprises year after year. 11 . undertaking expansion/modernization/diversification of the existing enterprises.
de velop expertise in new areas so as to equip himself with the knowledge and techn iques to deal with emerging new problems of corporate business world. dedicated to achieve this objective through his dynamism. regulations and politics affecting business conditions frequently change. diversifications. He has to keep pace with the changing environment where government rules. He ha s to assume wider responsibilities of saving industrial units from going sick an d guiding industries to be setup in industrially backward areas to eliminate reg ional imbalances in industrial development of the country. modernizations or replacements of existi ng plant and machinery or other equipments putting new demands for finances and necessitating overhauling of the capital structure of the firms. 12 .Merchant Banking in India Role of Merchant Banker The role of merchant banker is dynamic in the wake of diverse nature of merchant banking services. Merchant banker has to think and devise new instruments of financing industrial projects. Merchant banker is. The nature of merchant banking services is development oriented and promotional to help the industry an d trade to grow and survive. therefore. Merchant banker’s dynamism lies in promptly attending to the co rporate problems and suggest ways and means to solve it. He is always awake to renew his skills. where science and tech nology create new innovations in production processes of industries envisaging i mmediate renovations.
merchant bankers have very significant rol e to play tuning their activities to the requirements of the growth pattern of t he corporate sector. the industry and the economy as a whole which is. a merchant banker has to be dynamic. To discharge the above role. along with the entrepreneurs. In the days ahead. in it. a challenging task and to meet these challenges merchant bankers will have to be m ore vigorous and strategic in playing their role. 13 . He has t o help the industry in different forms to ensure that it runs risk free and devo id of uncertainty by assisting the promoters with his knowledge and skills to re solve the problems being faced by them. the investors and the whole community. He has to watch the interest and win ove r the confidence of the government. They will have also to adopt n ew ways and means in discharging their role. He must bridge the communication gap betw een different sections and resolve the problem being faced in different areas co ncerned with the business world. its agencies.Merchant Banking in India He has to guide the wider section of the community possessing surplus money to i nvest in corporate securities and other productive investment channels.
Bank of India and Syndicate Bank in 1977. Punjab N ational Bank. Canara Bank and Indian Overseas Bank in late ‘70s and early ‘80s. United Commercial Bank.Bank of Baroda.The division took up the task of assisting new entrepreneurs and existing units in the evaluation of new projects and raising funds through borro wing and equity issues. Merch ant bankers are permitted to carry on activities of primary dealers in governmen t securities. Consequent to the recommendations of Banking Commission in 1972.Merchant Banking in India The growth of merchant banking in India Formal merchant activity in India was originated in 1969 with the merchant banki ng division setup by the Grindlays Bank. In the initial years the SBI’s objective was to rend er corporate advice and assistance to small and medium entrepreneurs. the largest foreign bank in the country . Standard Chartered Bank and Me rcantile Bank in 1978 and United Bank of India. ICICI started merchant banking activities in 1973 follo wed by IFCI (1986) and IDBI (1991). Following Grindlays Bank. t hat Indian banks should offer merchant banking services as part of the multiple services they could provide their clients. The main service offered at that time to the corporate enterprises by the merc hant banks included the management of public issues and some aspects of financia l consultancy. Citibank set up its merchant banking di vision in 1970. 14 . State Bank of India started the Merch ant Banking Division in 1972. The commer cial banks that followed State Bank of India were Central Bank of India. Amon g the development banks. Management consultancy services were also offered.
Most of the financial institutions in India are in public sector and therefor e such setup plays a role on the lines of government priorities and policies. These organizations have brought professionalism in merchant banking sector and they help their parent organization to make a pr esence in capital market. From the point of organiz ational setup India’s merchant banking organizations can be categorized into four groups on the basis of their linkage with parent activity. Securities and Exchange Board of India has divide d the merchant bankers into four categories based on their capital adequacy. Canara Bank. The parent banks are either nationalized commercial bank or the fo reign banks operating in India. etc. Eac h category is authorized to perform certain functions.Merchant Banking in India 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. subsid iary companies established by bankers like SBI. Bank of India. (B ) Banker Base These merchant bankers function as division/subsidiary of banking organization. They are: (A) Institu tional Base Where merchant banks function as an independent wing or as subsidiar y of various private/Central Governments/State Governments financial institution s. Punjab National Ban k. 15 . Some firms are also organized by financial and technical consultants and professionals.
Private sector merchant banking firms have come up either as the sole proprietorship or public limited companies. Many of these firms were in existen ce 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. These brokers u ndertake merchant banking related operations also like providing investment and portfolio management services.Merchant Banking in India (C) Broker Base In the recent past there has been an inflow of qualified and pro fessionally skilled brokers in various stock exchanges of India. These organizations are the outcome of opportunit ies and scope in merchant banking business and they are providing skill-oriented specialized services to their clients. (D) Private Base These merchant banking firms are originated in private sector. Some foreign merchant bankers are also e ntering either independently or through some collaboration with their Indian cou nterparts. 16 .
Co-operative Society Generally it is preferred that the Merchant Banking outf it be a registered company. Hindu Undivided Family (HUF) d. Merchant Banks are generally setup as subsidiary com panies of banks (Public or Private). profitability. Sole proprietorsh ip b. Capital adequacy. 17 . growth opportunities a nd current market size are some of the factors which need to be looked into. SBI caps. Formation of the Business Organization SEBI act. Corporate Enterprises e. However. ICICI Securities etc . Partnership firm c. 1992 does not prescribe any specific form of business organization to carry on the activities as merchant ba nker. 2.Merchant Banking in India Requirements for setting up a merchant banking outfit 1. 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. the types of organizations are listed below: a. For example.
• Category II. to act as adviser. b. that is to act as underwriter. adviser. consulta nt to an issue. and (ii) to act as adviser. consultant. de termining financial structure. underwr iter. portfolio manager.manager. that is to act only as adviser or consultant to an issue. Category IV. co. tie-up of financiers and final allotment and refu nd of the subscription. Application for grant of certificate An a pplication for grant of a certificate needs to be made to SEBI . manager. which will inter-alia cons ist of preparation of prospectus and other information relating to the issue. Category III. underwriter. Application to conform to the requirements 18 . p ortfolio manager. Registration of Merchant Bankers a. consultant. The application can be made for any one of the following categories of the merchant banker name ly:• Category I. that is – (i) to carry on any activity of the issue management. that is. • • To carry on the activity as underwriter or portfolio manager a separate certific ate of registration needs to be obtained from SEBI.Merchant Banking in India 3.
The applicant or its principa l officer may appear before the Board for personal representation. d. which are relevant to the activities relating to m erchant banker and in particular the applicant complies with the following requi rements. otherwise it may be rejected. all matters. equipments. c. Furnishing of information. namely: • the applicant shall be a body corporate other than a non. Considerat ion of application The Board shall take into account for considering the grant o f a certificate. clarification and personal representation The Board may require the applicant to furnish further informatio n or clarification regarding matters relevant to the activity of a merchant bank er for the purpose of disposal of the application. and ma npower to effectively discharge his activities • • 19 .Merchant Banking in India The application should conform to all the requirements under the SEBI guidelines .banking financial comp any 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 subjec t to the condition that it shall not accept or hold public deposit the applicant has the necessary infrastructure like adequate office space.
The networth shall be as follows. his partner. 000 Nil the applicant. 5. • • e.Merchant Banking in India • the applicant has in his employment minimum of two persons who have the experien ce to conduct the business of the merchant banker a person directly or indirectl y connected with the applicant has not been granted registration by the Board. 00. director or principal officer is not involved in any litigation connected with the securities market which has an adverse bearing on the business of the applicant and have not at any time been convicted for any o ffence involving moral turpitude or has been found guilty of any economic offenc e the applicant has the professional qualification from an institution recognise d by the Government in finance. 20. 50. Category Category I Category II Category III Category IV • Minimum Amount Rs. t he applicant fulfils the capital adequacy requirement is as follows: • • The capital adequacy requirement should not be less than the net worth of the pe rson making the application for grant of registration. 00. 00. law or business management grant of certificate to the applicant is in the interest of investors. 000 Rs. 00. 000 Rs. Procedure for Registration 20 .
wher eupon the merchant banker shall cease to carry on any activity as a merchant ban ker for the period during which the suspension subsists. The Merchant Bank can c ommence business on acquisition of a Certificate of Registration from the SEBI a fter completion of the above mentioned formalities. the Board may suspend the registration certificate. On the grant of a certificate the applicant shall be liable to pay the fe es as prescribed.Merchant Banking in India The Board on being satisfied that the applicant is eligible shall grant a certif icate. f. Payment of fees and the consequences of failure to pay fees Every applicant e ligible 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 p rovided in Schedule II. 21 .
Merchant Banking in India MAIN OBJECTS OF MERCHANT BANKER Merchant bankers render their specialized assistance in achieving the main objec tives which are presented below: 1. To carry on the business of merchant banking , assist in the capital formation, manage advice, underwrite, provide standby as sistance, securities and all kinds of investments issued, to be issued or guaran teed by any company, corporation, society, firm, trust person, government, munic ipality, civil body, public authority established in India. 2. The main object o f merchant banker is to create secondary market for bills and discount or re-dis count bills and acts as an acceptance house. 3. Merchant banker’s another objective is to set up and provide services for the venture capital technology funds. 4. They also provide services to the f inance housing schemes for the construction of houses and buying of land. 5. They render the services like foreign exchange dealer, money exchange, and authorized dealer and to buy and sell foreign exchange in all lawf ul ways in compliance with the relevant laws of India. 22
Merchant Banking in India 6. They will invest in buying and selling of transfers, hypothecate and deal wit h dispose of shares, stocks, debentures, securities and properties of any other company. OBLIGATIONS AND RESPONSIBILITES Merchant bankers have the following obligations and responsibilities. 1. Merchant banker should maintain proper books of accounts, records and submit half yearly/annual financial statements to the SEBI within stipulated period of time. 2. No merchant banker should associate with another merchant ba nker who is not registered in SEBI. 3. Merchant bankers should not enter into an y transactions on the basis of unpublished information available to them in the course of their professional assignment. 4. Every merchant banker must submit hi mself to the inspection by SEBI when required for and submit all the records. 5. Every merchant banker must disclose information to the SEBI when it requires an y information from them. 6. All merchant bankers must abide by the code of condu ct prescribed for them. 23
Merchant Banking in India 7. Every merchant banker who acts as lead manager must enter into an agreement with the issuer setting out mutual rights, liabilities, obligations, r elating to such issues with particular reference to disclosures allotment, refun d etc. CODE OF CONDUCT According to the 13 Regulation of the SEBI of 1992 (Merchant bankers), every mer chant banker should comply with following codes of conduct. They are: a) The mer chant banker must observe high integrity and fairness in all his dealings. b) He shall render at all times high standard of services, exercise due diligence, exercise independent professional judgement. c) If necessary, he must disclose to his clients the possible source of conflict of duties and interests . d) The merchant banker should not indulge in unfair practice or unfair competi tion with other merchant bankers. e) He should not make any exaggerated statemen t about his capacity or achievement. 24
the best possible advise and prompt effici should maintain the secrecy of all the con the course of service to his client. the first issue by the existing private companies a nd public issues by the existing listing companies. They are presented below: 25 . The SEBI is the most powerfu l organization to control and lead both the primary market and secondary market. g) He fidential information received during should not engage in the creation of ation. The SEBI has announced the new guidelines for the disclosures by the Companies leading to the investor protection. 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 SEBI has issued guideli nes for the issue of capital by the companies.Merchant Banking in India f) He should always Endeavour to give ent and cost effective service. h) He a false market or price rigging or manipul GUIDELINES OF SEBI After the obligations of the CCI. The issue of capital and pricing of is sues by companies has become free of prior approval. the place was occupied by a legal organ called as “Securities and Exchange Board of India”.
This scheme is applicable t o 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. the deta ils should be disclosed. h) The Company should disclose the safety net scheme or buy back arrangements of the shares proposed in public issue. f) The company should disclose the time normally taken for the disposal of vario us types of investor’s grievances. e) The minimum app lication money payable should not be less than 25 per cent of the issue price. Financial institution (20%). b) 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. FIIS (24%). d) The Promoters of the Company must maintain t heir holding at least at 20 per cent of the expanded capital. g) The Company can make firm allotments in publ ic issues as follows: Indian mutual funds (20%). Regular employees o f the company (10%).Merchant Banking in India a) If any Company’s other income exceeds 10 per cent of the total income. 26 . c) The Co mpany should also disclose the information regarding the capacity utilization of the plant for the last 3 years.
27 . No preferential al lotment may be made along with any rights issue. are different kinds of financial institutions that perform different services. while many investment banks participate in trade financing activities . in case of the public issues. In theory. the Company should give advertisements in not les s than two newspapers about the dispatch of letters of offer. j) According to the SEBI guid elines regarding rights issue. the fine lines that separate the functions of merchant banks and investment banks tend t o blur. The difference between investment banks and merchant banks Merchant banks and investment banks. investment banks and merchant banks perform different functions. at least 30 mandatory collection centre should be established. Traditional merchant banks often expand into the field of securities und erwriting.Merchant Banking in India i) According to the guidelines. k) The Company should also disc lose about the fee agreed between the lead managers and the Company in the memor andum of understanding. In practice. in their purest forms.
As a general rule. foreign real estate investment. invest ment banks did not deal with the general public. i nvestment banks focus on initial public offerings (IPO’s) and large public and pri vate share offerings. Investment banks facilitate mergers and acquisitions through share sales a nd provide research and financial consulting to companies. Traditionally. but there are a few characteristics that most compa nies that offer both investment and merchant banking share. While investment banks tend to focus on larg er companies. Traditionally. Some of the activities that a pure merchant bank is involved in may include issuing letters of credit. bridge financing. Traditional merchant banks prim arily perform international financing activities such as foreign corporate inves ting. trade consulting and co-investment in projects involving trade of one form or another . trade finance and international transactio n facilitation. merchant banks offer their services to companies that are too big for venture capital firms to 28 . inves tment banks only participated in underwriting and selling securities in large bl ocks. Merchant banks tend to operate on small-scale companies an d offer creative equity financing. The current offering of investment banks and merchant banks varies by the instit ution offering the services.Merchant Banking in India Pure investment banks raise funds for businesses and some governments by registe ring and issuing debt or equity and selling it on a market. mezzanine financing and a n umber of corporate credit products. transferring funds internationally.
larger merchant banks tend to privately place equity with othe r financial institutions. Merchant banks still offer trade financing products to their clients. Merchant banks and Commercial banks 29 .Merchant Banking in India serve properly. In order to bridge the gap between venture capital and a public offering. but are still too small to make a compelling public share offeri ng on a large exchange. often taking on large portions of ownership in compani es that are believed to have strong growth potential. 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.
and liaisoning with SEBI. banks majority management of equity issues in the business is of terms lending and SERVICES OF MERCHANT BANKERS:Merchant bankers provide services as follows: 30 . 2) Advisor not financer.e. bank depo sits.Merchant Banking in India Merchant banks Commercial banks 1) Assist in raising capital in the form of Provide funds in the form of equity. piercing of issue. and syndicated term loan and working capital. underwriter. 6) Most of wo rk they get is about Commercial capacity of lead manager. they are closer to the Being lenders. 4) Mainly fees based business. they are more customers and get to know risks of the cautions. Mainly fund based business 5) Being advisors. 3) Do not accept chequable deposits . loan working c apital instruments. assess risks in lending transaction s pr operly. book running. Demand deposits are the key feature. Financing is the main business. preference shares. They work on proposal and cannot afford to be risks shields i. mitigat ion measures grossly relationship based and close to the customer.
Merchant Banking in India Business planning stage: Equity raising: 1)project feasibility study 2)advice on capital structuring 3)preparation of pro spectus and liaison with SEBI 4)pricing decisions 5)marketing in the capacity of lead managers 6)underwriters to the issue 7)post issue management 8)assistance in ADR/GDR 9)management of debenture issue 10)preparation of bankable proposal a nd syndication of loan 11)assistance in arranging optimal capital finance 12)adv ice on acquisitions 13)corporate structuring advice mergers and Debt raising: Working capital raising: Strategic advice: SERVICES PROVIDED BY MERCHANT BANKS: (in detail) The development activity through the country had exerted excess demand on the so urces of funds by the ever expanding industry and trade which could not be met b y the All India Financial Institutions. In these circumstances. the corporate se ctor enterprises had the only alternative to avail themselves of 31 .
Merchant bankers not only provide advisory ser vices to corporate enterprises but also advise the investors of the incentives a vailable in the form of tax relief and other statutory obligations. and the investors to inve st their saved money in sound and healthy concerns with confidence. the me rchant bankers help industry and trade to raise funds. Thus. Broadly a merchant banker can provide the following services: • • • • Corporate Counseling Project Counseling And Pre-Investment Studies Credit Syndic ation And Project Finance Issue Management 32 . The need of merchant banker is also felt in the wake of huge untapped public savings as merchant bankers can play a highl y significant role in mobilizing funds from savers to invest in channels assurin g promising return on investments and thus narrow down the gap between demand fo r and supply of investible funds.Merchant Banking in India the capital market services for meeting the long-term fund requirements through capital issues of equity and debentures. safety and e xpectation of higher yields. The growing demand for funds from capit al market has enthusied many organizations to enter into the field of merchant b anking for managing the public issues.
Amalgamations And Take-Over Arranging Offshore Finance Fixed Deposit Broking Relief To Sick Industries Let’s take a brief look at each of these functions: Corporate Counseling 33 .Merchant Banking in India • • • • • • • • • • • Underwriting Bankers Portfolio Management Venture Capital Financing Leasing NonResident Investment Counseling And Management Acceptance Credit And Bill Discoun ting Advising On Mergers.
A merchant banker finds out the prob lems of enterprise.Merchant Banking in India It includes a whole range of financial services provided by a merchant banker to a corporate unit a view to ensure better performance. working capital. pricing. fixed deposits. loan syndication. project counseling. Project Counseling Project counseling is an important merchant banking service w hich includes preparation of project reports.e. choice of a product. acceptance credit. leas e financing. deciding upon the financing patter n to finance 34 . It covers the entire field of merchant banking activities i. and suggests ways and means to solve those problems. However. capital restructuring. which shall include organizational goals for the enterprise. portfolio ma nagement and the full range of financial engineering including venture capital. the scope of corporate counseling is limited to suggestions and opinions leaving to the client to take corrective actions for solving its corporate problems. maintain steady growth an d create a better image among investors. etc. public issue management.. etc. size of the organization and operational scales.
Merchant banker has to decide the financi ng mix of the internal and external sources of funds keeping in view the rules. for ensuring market for the proposed product. appraising the project report with the financial instit utions/banks. Credit Syndication 35 . While rendering project counseling services. Project reports are prepared to obtain government approval of the project. The t wo sources of funds available to finance the project cost are internal sources o f funds (or owners funds) which includes promoter s contribution and retained e arnings. for procuring financial assistance from financial institutions and bank s. regulations and norms prescribed by the government or followed by the term lendi ng financial institutions. technical.Merchant Banking in India the cost of the project. private investors and financial institutions and in t he form of debentures from the public. Financing the project cost is an important aspect of project counseling. commercial and financial viability of the project. and external sources of funds which refers to the borrowed funds in the form of loans from banks. etc . the merc hant banker has to ensure that the application forms for obtaining the funds fro m financial institutions are filled in with relevant and appropriate information and before submitting the application. for planning public issues. the merchant banker has to appraise the project considering the various aspects as to the type of the project. location.
mutual funds etc. salaries etc. This service rendered by the merchant banker in arranging and procuring credit from financial institution s. or from external sources like short term borrowings from banks etc.Merchant Banking in India Once the client company has decided about the project proposed to be undertaken. banks and other lending and investment organizations for financing the client s project cost or meeting working capital requirement is referred to as loan sy ndication or credit syndication. the next step is looking for the sources wherefrom the funds could be procured to implement the project. Credit syndication in case of domestic borrowin gs is with the institutional lenders and banks. commercial banks. SIDC etc. paym ent of wages. Long and medium term funds are o btained from the All India Financial Institutions like IFCI. Sh ort-term funds are also required by the firm for purchase of raw materials.. Issue Management and Underwriting 36 . Merchant banker has to locate the sources of funds and comply the formalities required to procure the funds.. IDBI etc. state le vel financial bodies like SFC. Sources of financing these short term requirements o r working capital needs can be from internal sources like internal accruals from working or operations and short term loans from friends and relatives.
before the public issue has to obtain the consent of the stock exchanges to the memorandum and articles of a ssociation. file the prospectus with registrar. draft the pr ospectus and obtain consent from the companies legal advisors. Public issue management involves marketing of corporate securities by offering the securities to the public. The abolition of the managing agency s ystem. calculation of underwriters liability in case of under su bscription and complying the necessary statutory requirements for listing of sec urities on the stock exchange. Previously. .Merchant Banking in India Management of capital issues is a professional service rendered by the skilled a nd experienced merchant bankers. underwriters. the managing agents for a particula r corporate used to manage public issues. board of director s and other concerned parties. procuring private subscription to the securities and offering securities to existing shareholders of the company. Under writing of public issue 37 . make an appli cation for enlistment with stock exchanges and finally advertise for the issue. solicitors and board of directors. the growth in the public limited companies in number and size. A merchant bankers post issue activities include final allotment and/or refund o f subscription amount. appoint other managers.advice the company to appoint auditors. As a manager to the public issue. the imposi tion of new rules and regulations regarding the public issue of securities made it necessary for merchant bankers to play a definite role in the management of p ublic issues. brokers etc. bankers. the merchant banker.
Merchant Banking in India A fully underwritten public issue spells confidence to the investing public. Underwriti ng is only the guarantee given by the underwriter that in the event of under sub scription. which f loat a public issue usually. It expands its clientele by underwriting more and mo re issues. It earns the right to be appointe d as bankers of that issue. whi ch ensures a good response to the issue. desire a full underwriting of the issue. Bankers to the Issue The merchant banker can automatically become the banker to the issue in the following cases: • • • • The bank is a broker to the company It has given underwriting commitments. Portfolio Management 38 . the amount underwritten would be subscribed in proportion by the unde rwriter. Keeping this in view companies. It ac ts as a manger to the issue The function of a banker to the issue is to accept a pplication forms from the public together with subscription money and transfer t hem to the account of the controlling branch. An underwriter of the issue gets the following benefits: • • • It earns a commission of the commitment given.
bonds etc. P ortfolio management refers to managing efficiently the investment in the securit ies held by professionals to others. s tock exchange regulations. etc. stud y the securities market and identify blue chip companies in which money can be i nvested. A merchant banker while perform ing the services of portfolio management has to enquire of the investment needs of the client. providing special services wit h a view to ensure maximum return by such investments with a minimum risk of los s of return on the money invested in securities.Merchant Banking in India Portfolio refers to investment in different types of marketable securities or in vestment papers like shared. liquidity requirements. they should study the economic environment affecting the capital market. ability to bare risk. from di fferent companies or institutions held by individuals firm or corporate units. et c. They should keep record of latest amendment in government guidelines. debentures and debenture stocks. Merchant bankers take up management of a po rtfolio of securities on behalf of their clients. RBI regulations. Advisory Services Relating To Mergers and Takeovers 39 . the tax bracket.
Merchant bankers a re the middlemen settling negotiations between the offered and the offeror. which is the purchase. seeking expansion in production and market segments.Merchant Banking in India A merger is defined as a combination of two or more companies into a single comp any where one services and other looses their corporate existence.e. A merger is a lso defied as an amalgamation wherein the shareholders of the combining companie s become substantially the shareholders of the company formed. If the objective of merger is growth oriented i. Thei r role is specific and specialized in handling the mergers and taker over assign ments. A takeover is ref erred to as an acquisition. 40 . utilization o f existing companies or optimum utilization of resources. 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. Based on the purpose of business objective. then the acquirer comp any will select a business related company as a merger partner. i. the acquirer as well as the acquired compan y.e. the search of the acquirer compan y will start for a merger partner company. by one company of a controlli ng interest in the share capital of another existing company. Being a professional expert.
financial institution. 41 . getting approval of company B oard. Once the merger pa rtner is proposed the merchant banker has to appraise the merger/takeover propos al with respect to financial viability and technical feasibility. arranging for the meeting e tc. documents and tax consultancy. He has to nego tiate with the parties and decide the purchase consideration and mode of payment . legal. while repayment is by selling the equity through stock market w hen the shares are listed.Merchant Banking in India If the objective is diversification in production line or business activities. The financing is by subscription to the equity capital. drafting the scheme of amalgamation. He has to comply with the legal formalities like getting approval from the Gov ernment/ RBI. t hen it will select a non-related company as a merger partner. Many merchant bankers are entering into this area by also financing viable upcoming projects. The services include arrangement for lease finance f acilities for leasing companies. high court if required. Venture Capital Financing Financing an emerging high-risk project is called venture capital financing. Leasing Is there another lucrative area of financing where merchant bankers are turning? Leasing is a viable source of financing whil e acquiring capital assets.
portfolio management. selection of securities. Arranging Offshore Finance The merchant bankers also help their clients in the following areas involving foreign currency financing: 1. Financing Of Ex ports And Imports 2. these services are not currently provided by merchant bankers i n India the principal reasoning being the lack of an active market for commercia l bills. negotiations. compliance with procedural an d legal aspects etc. Foreign Collaboration Arrangements The assistance rendered as in the case of f inancial services covers appraisals. Long Term Foreign Currency Loans 3. Joint Ventures Abroad 4 . Acceptance Credit and Bill Disc ounting Though merchant bankers world over specialize in acceptance credit and b ill discounting. etc. the merchant bankers provide investment advisory services to the NRIs i n terms of identification of investment opportunities.Merchant Banking in India Non Resident Investment To attract NRI investments in the primary and secondary markets. etc. 42 . they also take care of operational details like purch ase and sale of securities securing the necessary clearance from RBI under FERA for repatriation of dividends and interest.
3. 4. Preparations of programs and p ackages for rehabilitation of sick units. terms of deposits and other related issues are also offered t o the client. 43 . Relief to Sick Industries The services offered by merchant bankers to sick indus tries can be summarized as follows: 1. 6. Assessment of capital requirements and co unseling on capital restructuring. They take care of the procedural and legal aspects.Merchant Banking in India Management of Fixed Deposits of Companies Recently. Appraisal of technological. environmental. 5. Obtaining nece ssary approval for implementation the rehabilitation package from the statutory authorities. Advice with regard to the amount to be raised. 2. interest charges. Monitoring the implementation of the scheme of rehabilitation. Providing necessary assistance wher e the rehabilitation package involves mergers or amalgamation. and also mange the collection and subs equent servicing of the deposits. financial and other factors causing sickness. merchant’s bankers have begun to structure and mobilize fixed deposits for their corporate clients.
the stock exchanges. 2. following qual ities are necessary: 1. Capital market familiarity: Merchant banker should be well versed with stock markets. depositories and other government authorities for publ ic issue related duties. Knowledge: thorough understanding of technical issues related to business. financial expertise is a key thing a merchant banker must know. 44 . Th is only can see speedy and favorable clearances by the authorities. appreciation of bus iness acumen. RBI. He should track imp happenings in the marke t on ongoing basis. Liasioning ability: Merchant bankers are required to liaison with SEBI. their movements. understanding of legal and statutory requirements. De livery of his services depends on his basic understanding of these issues. It is imperative that a merchant bank maintains excelle nt rapport with all of them and also close relations even at informal levels.Merchant Banking in India Qualities of merchant bankers:To be a successful merchant banker. 3.
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 di sclosed to the merchant banker. 5. Innov ation is required even to address stringent legal requirements. 45 . Innovation: Corporate may approach with unique requirements. Standard solutions and products may not solve problems sometimes. Merchant banke rs should do out of box thinking and be able to do financial engineering.Merchant Banking in India 4. They c an device new financial instruments and get approved from the authorities.
Giant professional or multinational merchant bankers in their approach to Indian market. Malafide practices: India corporate culture is bettering. So the same promoters have to setup different compa nies for different purposes. there is still scope for fu rther improvement. multiple use of same talent is not possible. I. This gives growth to more by-day firms. hire purchase. 46 shares.e . Management cost increases and expertise pooling i. This is specifically evident in comparison with insurance industry and mutual funds ind ustry.Merchant Banking in India Problems and hurdles:Not many but some problems are faced by Indian merchant ban kers. tampe like to use m boutique flyare cautions . and portf olio management. leasing. but still many corporate have excessively friendly approach. Regulations: though regulations are much better now. III. Merchant bankers can be made more accountable and responsible . Industry compartmentalization: company which is in merchant banking business would have expertise in underwriting. But RBI does not permit merchant banking firms t o get into these activities. money-lending. Indus try is not well organized and all the players do not play the same tune. Favored allotment of ring with project appraisal report to bankers is common. Corporate erchant bankers for malafide intentions. II. Professional qualification focused on merchant banking is not available.
Merchant bankers assist in decision making and hence their scope increases. They should setup a subsidiary for the pu rpose. and 1. Obviously. etc. 47 . Lots of new and green fried projects are happening. Merch ant bankers have lots space to contribute. With significant market freedom. In fact India is one of the largest emerging markets. Indian scen ario is favorable to merchant bankers. FDI. Some countries allow comm ercial bankers to get involved in IPO’s. 2.Merchant Banking in India Scope for merchant banking in India:Scope for merchant banking depends upon size of the market. merchan t bankers work has increased many folds. public issues. restriction-liberation. This policy also results in fair business practices. more the things left to be decided by the corporate. Size and dynamics of the market: Indian market is growing. This limits scope of commercial banks and gives space to merchant bankers . placement of debentures. Banking policies: RBI prefers that commercial banks do not indulge in merchant banking business directly. deb t raising are on rise. corporate dynamics. Restrictions-liberalization: more liberal the market is. banking policies. co rporate culture. 3.
takeover acquisition. active money market are all providing better business prospectus to merchant bankers. India inc. 5. If the corporate prefer third-party independent assessment. Otherwise merchant bank er’s role is only statutory as in issue management. Mergers. 48 . strategic restructuring in house as well. apparently prefers and is happy with merchant bankers work.Merchant Banking in India 4. Corporate culture: corporate can do project appraisal. Corporate dynamics: more happening in business gives more opportunities to merchant bankers. fund raising for government institutions. new Greenfield projects. then only they will engage merchant bankers.
BSE got a strong companion as NSE. Indian finance companies dom inated merchant banking in early years. Now giant multinational merchant bankers are showing presence in India. pricing became a critical issue. Book building and book running is an imp exe rcise. As the size of capital market increase d. With India liberalizing its policies. Earlier. stock markets in India nasce nt stage. Virtua lly every PSU bank has merchant banking subsidiary.Merchant Banking in India Progress of merchant banking in India:Merchant banker’s main activity is of manage ment of public issue of shares. Issue pric ing was also dictated by CCI. it was replaced with SEBI. Both are highly aut omated and sophisticated now. 49 . Physical shares were replaced with demat. Number of merchant bankers is on rise since liberation. Market and its scope are growing. As stock markets in the country progress or move . merchant banker’s business activity grows. Controller of capital issues was the controlling authority. Merchant banker’s role in CCI era and in restricted freedom was of course not so significant. its presence in international marke ts has increased. Later.
ceiling rates on merch ant bankers’ commission: Project appraisal fee Discretion and negotiable(no ceilin g) Public issue management fees 0.5% 2% 1.5lakh In ex cess of Rs.5% 1% 0.Merchant Banking in India Merchant bankers commission:SEBI and ministry of finance. Shares and debentures Up to Rs.5% devolvingOn amt subscribed by the public 2.25 crores On amt 2.5lakh 2.5% up to Rs.5% of total issue Lead managers commission Underw riting commission Equity shares Pref.5% 50 .
AMBI is dormant at present. but it has not really been officiating as one . 51 .Merchant Banking in India Association of merchant bankers in India (AMBI): Association of merchant bankers in India is a professional non-profit company se tup to represent the industry. Training and awareness p rograms are also expected from AMBI. AMBI was given SRO status in 1995. This follows a feeling among AMBI members that it is being sidestepped when decisions relating to merchant bankers are being taken. ARTICLES:A MBI-SEBI talks on SRO ENS ECONOMIC BUREAU MUMBAI. Because of lack of support from the members and non-initiative from SEBI/government. It is expected to set code of ethics and facilita te dialogue between the industry and regulatory bodies. May 8: The Association of Merc hant Bankers of India (AMBI) is proposing to have an exhaustive dialogue with th e Securities and Exchange Board of India (SEBI) on its functioning as a self-reg ulatory organization (SRO).
AMB I feels that the member should have been given a fair hearing and also feels tha t 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.Merchant Banking in India 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. 52 . This wa s also demanded without consulting/informing AMBI. The association has already m ade its disappointment clear to SEBI and the proposed dialogue is reportedly bei ng undertaken to clear all misunderstandings. Then there was the issue of asking all merchant bankers to furnish details of employees to SEBI. AMBI will discuss the matter at a board meeting scheduled for May 15.
53 .Merchant Banking in India EXAMPLE:MERCHANT BANKING SERVICES INTRODUCTION Canara Bank is also one of the leading Me rchant Bankers in India. They undertake "project appraisals" with resource raising plans from Capital Mar ket/ Debt Markets and facilitate tie-ups with Banks / Financial Institutions and Potential Investors. It’s SEBI registered Category I Merchant Banker / Underwriter to carry on Issue Ma nagement (Public / Rights / Private Placement Issues). PSUs. State own ed Corporations. offering specialized services to Banks. They also hold SEBI registration Certifica te to act as "Bankers to an Issue" with network of exclusive Capital Market Serv ice Branches to handle “Capital Market" related assignments. Underwriting. Consultancy and Corporate Advisory Services etc. Local Statutory bodies and corporate sector.
Equity Issue (Public/Rights) Management Debt Issue Management Private Placements Project Appraisals 54 2. Loan Syndication As leading Me rchant Bankers in India. SPECTRUM OF SERVICES:1. 3. 4. . and have an edge in handling Private Placement issues – both retail & HNIs . Ban kers to Issue .1500 crores. Investments 4. Commercial Banking 3. Underwriting 6.Merchant Banking in India Their uniqueness is extending services under single window concept covering the following areas: 1.1crore to Rs.Escrow Bankers 5. they have associated with issues ranging from Rs. statutory Bodi es etc. banks. involving various types of industries. Merchant Banking 2.
12. Monitoring Agency Assignments IPO Funding Security Trustee Services Agriculture Consultancy Services Corporate Advisory Services Mergers and Acquisitions Buy Ba ck Assignments Share Valuations Syndication 6. ISSUE MANAGEMENT SERVICES:1.Merchant Banking in India 5. Project Appraisal Capital structuring Preparation of offer document Tie Ups (pla cement) Formalities with SEBI / Stock Exchange / ROC etc. 7. 13. 9.. 7. 4. 10. Underwriting Promotio n /Marketing of Issues 2. 6. 8. 11. 3. 55 . 5.
visibility to profitability within a 12-month period. 5. 4. 11. 56 . 2. Investment Criteria:A wide range of later stage opportunities are considered. Having established business partnerships that give it a major position in a market space. 12. P roven management team. Having weathered the start-up process and established a core business model that is sustainable.Merchant Banking in India 8. 10. Ta rgeted companies include the following characteristics: 1. They look for opportunities for synergistic consolidation and/or companies that are on the ve rge of extraordinary growth. Technology or business that is scalable with global applications. Collecting Banker / Banker to an issue Post Issue Management Refund Bankers Hand ling of Dividend Warrant/Interest Warrant Payments Debenture Trusteeship 9. If not already profitable. Significant barriers to entry. and 6. 3.
57 . They provide the resources.Merchant Banking in India STATE BANK OF INDIA SBI’s Merchant Banking Group is strongly positioned to offer perfect financial sol utions to your business. convenience and services to meet your needs by arranging Foreign Currency credits through: • C ommercial loans • Syndicated loans • Lines of Credit from Foreign Banks and Financia l 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. They specialize in the arrangement of various forms of Foreign Currency Credits for Corporate.
Their Primary focus is On Indian Clients. 58 . PRODUCTS AND SERVICES 1] Arranging External Commercial Borrowings (ECB) 2] Arran ging and participating in international loan syndication 3] Loans backed by Expo rt Credit Agencies 4] Foreign currency loans under the FCNR (B) scheme 5] Import Finance for Indian corporates. SBI’s seasoned Team of professionals provides you with Insight ful credit Information and helps you Maximize the Value from the transaction.Merchant Banking in India SBI being an Indian entity has no India exposure ceiling.
5crore customers through 4520 branches and 439 extension cou nters is the largest amongst Nationalized Banks. All the Branches of the Bank have been computerized. Our gamut of Merchant Banking services inc ludes: • Issue Management Services – to act as Book Running Lead Manager/Lead Manager for t he IPOs /FPOs/Right issues/Debt issues • Project appraisal • Corporate Advisory Services • Underwriting of equity issues 59 . Any Where Banking" through the introduction of Centralized Banking Solution (CBS) and over 2511 offices have already been brought under its ambit. The Bank has a concept o f "Any Time. The Bank is registered with SEBI as Category – I Merchant Banker for providing all the major Merchant Banking services. The Bank has recently been rank ed 21st among top 500 companies and 9th among top 50 brands by the Economic Time s.Merchant Banking in India PUNJAB NATIONAL BANK India’s one of the Leading Nationalized Bank established in 1 895. serving over 3.
onlin e status of paid instruments.Merchant Banking in India • Banker to the Issue/Paying Banker • Refund Banker • Monitoring Agency • Debenture Trustee • Marketing of the issue through a strong network of QIBs/HNIEs/ Corporates and Retail investor. Its unique features prov ides online payment of the instrument by our 2470 branches in 733 centers. The Bank has an exclusive and specialized Capital Market Service Branch at New Delhi for providing Merchant Banking Services to the Corporate 60 . 100% reconciliation at any point of time etc. The Bank itself is one of the major investor in the market having a treasury of 45000 crores. Their Software for handling the Re fund Banker is one of the best systems in the industry.
there is no uniform pricing methodology and no Lead Manager is following the sam e methodology for all the issues handled. it has been concluded that.Merchant Banking in India CONCLUSION A new competition has started among Merchant Banking outfits in approving higher and higher premium to attract the business. In many cases their pricing emphasi s is one qualitative actors like promoters experience. Finally. marketing network. 61 . brand name and export potential and performance.
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