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Merchant Banking

Merchant Banking



In Partial Fulfillment of The Requirements For The Award Of The Degree Of Bachelor Of Commerce

ACADEMIC YEAR: 2011-2012


Merchant Banking

I,Neha.S.jhamnani,the student of J.W.Sadhubella Girls College, T.Y.Bcom{banking & insurance}(semester five) hereby declare that I have completed this project on Merchant banking in the academic year 2011-2012.the information submitted is true and original to the best of my knowledge.

Student Signature

Merchant Banking

I, Prof. GUNJAN CHOTRANI hereby certify that JHAMNANI NEHA of Third Year Bachelor of Commerce{Banking & Insurance} (Semester V) of J.W.SADHUBELLA GIRLS COLLEGE,Ulhasnagar-421001 has completed the project entitled MERCHANT BANKING in the Academic Year 2011-2012 under my guidance. The information submitted is true and original to the best of my knowledge.







Merchant Banking


This is to certify that Neha. S. Jhamnani Bachelor of Commerce{Banking & Insurance}(Semester V) for the academic year 2011-2012 has completed the project on MERCHANT BANKING under the guidance of Prof. Gunjan

Prof. Gunjan Chotrani (Project Guide)

Ms.Smitha Chawak (Co-ordinator)

DR.M.M.Hosalkar (Principal)

External Examiner

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I take this opportunity to present a sense of gratitude towards my project guide Prof. Gunjan Chotrani for her excellent guidance and letting me know about Merchant Banking and its importance in todays world. I would also like to thank college authorities, our principal and co-ordinator Mrs. Smitha Chawak for authorizing my project.

Merchant Banking

Objectives of the project

To study the significance of Merchant Banking

towards the development of securities industry.

To analyze issue management regulations.

To analyze the functions of Merchant Banking in

relation to rules and regulations of SEBI.

To evaluate the performance of Merchant Bankers,

both activity performance and operational and financial performance.

To draw a conclusion and suggestions based on the

analysis and experiences.

Merchant Banking

This project is a mixture of theoretical as well as practical knowledge. Also it contains ideas and information imparted by the project guide. Primary data: Primary data was collected by the conducting a survey on banking whereas some of the information was collected by visiting Union Bank of India branch. And customer survey on awareness on Merchant Banking was also conducted. Secondary data: The secondary data required for the project was collected from various kinds of books and websites, the name of which are mentioned in the bibliography.

Merchant Banking


Merchant Banking, as the term has evolved in Europe from the 18th century to today, pertained to an individual or a banking house whose primary function was to facilitate the business process between a product and the financial requirements for its development. Merchant banking services span from the earliest negotiations from a transaction to its actual consummation between buyer and seller. Merchant banking services strengthen the economic development of a country as they acts as sources of funds and information for corporations. Considering the way the Indian economy is growing, the role of merchant banking services in India is indispensable. These financial institutes also act as corporate advisory bodies to help corporations rightly get involved in various financial activities. According to the Ministry of Finance in India, a merchant banker is a person or body engaged in selling, buying and subscribing to securities or in advising the corporations on issue management.

The need of merchant banking services in India arises from the fact that high level industrialization is taking place in the country. So, there is need for skilled professionals who can take care of various finance-related needs of the advanced industrial sectors. These specialist services are also of great importance for the small and medium sized enterprises to help them operate smoothly.

Merchant Banking

History Meaning Definition


Objectives Functions Scope


Corporate counseling Project counseling Loan syndication Management of capital issues Dealing in secondary market Mutual funds Portfolio management Underwriters Mergers / amalgamations

Merchant Banking


Registration Regulation Obligation and Responsibilities


Organizational setup Development Stages


Level of Competition Current affairs Conclusion


Merchant Banking


Merchant Banking

History and Origin of Merchant Banking in India

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 rising 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

The word merchant bank does not have a fixed definition as this term is used differently in different countries. In United States these are called as Investment Banks and in UK they are called as accepting and issuing houses. The notification of Ministry Of Finance in India defines Merchant Banker as any person who is engaged in the business of issue management either by making arrangements regarding selling, buying, or subscribing to the securities as manager, consultant, adviser in relation to such an issue management. In general the merchant banks are the financial institution which provides financial services, solutions, & advice to corporate houses. Some of the world famous merchant banks are Goldman Sachs, Credit Suisse & Morgan Stanley etc. In India there are many banks which are into the field of merchant banking some of the banks are ICICI, State Bank Of India, Punjab National Bank etc.

Company raises capital by issuing securities in market. Merchant bankers act as intermediaries between the issuer of capital and the ultimate investor who purchase these securities.

Merchant banking. is the financial intermediation that matches the entities that need capital and those that have capital? It is function that facilitates the flow of capital in the market.

Merchant Banking


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.

In India, Merchant banker is a body corporate who carries on any activity of the issue management, which consists of preparation of prospectus and other information relating to the issue, determining financial structure, tie-up of financiers and final allotment and refund of subscription, assuming role of an advisor, consultant, manager to securities market related operations .

Merchant Banking

Merchant Banking in India

Merchant banking activity was officially commenced into the Indian capital Markets when Grindlays bank received the license from reserve bank in 1967. Grindlays started its operations with management of capital issues, recognized the requirements of upcoming class of Entrepreneurs for diverse financial services ranging from production planning and system design to market research. Apart from this it also provides management consulting services to meet the Requirements of small and medium sector rather than large sector. Citibank Setup its merchant banking division in Indian in 1970. Indian banks Started banking Services from 1972. State bank of India started the merchant banking division in 1972 After that there were many banks which set up the merchant bank division such as; ICICI Bank of India Bank of Baroda Canara Bank Punjab National Bank UCO Bank The Merchant Bank got more importance in the year 1983 when there was a huge boom in the primary market where the companies were going for new issue. Merchant banking activities are organized and undertaken in several forms. Commercial banks and foreign development finance institutions have organized them through formation divisions, nationalized banks have formed subsidiary companies, share brokers and consultancies constituted themselves into public limited companies or registered themselves as private limited Companies. Some merchant banking companies have entered into collaboration with merchant bankers of foreign countries abroad with several branches. Merchant Bankers in India As of now there are 135 Merchant bankers who are registered with SEBI in India. It includes Public Sector, Private Sector and foreign players some of them are Public Sector Merchant Bankers o SBI capital markets ltd o Punjab national bank o Bank of Maharashtra o IFCI financial services ltd

Merchant Banking

o Karur Vysya bank ltd, o State Bank of Bikaner and Jaipur Private Sector Merchant Bankers o ICICI Securities Ltd o Axis Bank Ltd (Formerly UTI Bank Ltd.) o Bajaj Capital Ltd o Tata Capital Markets Ltd o ICICI Bank Ltd o Reliance Securities Limited o Kotak Mahindra Capital Company Ltd o Yes Bank Ltd.

Foreign Players in Merchant Banking o Goldman Sachs (India) Securities Pvt. Ltd. o Morgan Stanley India Company Pvt. Ltd o Barclays Securities (India) Pvt. Ltd o Bank Of America, N.A o Deutsche Bank o Deutsche Equities India Private Limited o Barclays Bank Plc o Citigroup Global Markets India Pvt. Ltd. o DSP Merrill Lynch Ltd o FEDEX Securities Ltd

Merchant Banking


Merchant Banking

Main Objectives of Merchant Bankers

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. 2. 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. 3. Merchant bankers another objective is to set up and provide services for

the venture capital technology funds. 4. 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. 6. 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.

Merchant Banking

Qualities of a Good Merchant Banker



Aggressive action

Liasioning ability

Co-operation and Qualities of a Good Merchant Banker


Capital market familiarity



Problem solving attitude

Merchant Banking

Functions of a merchant banker..

1. Management of debt and equity offerings:This forms the main function of the merchant banker. He assists the companies in raising funds from the market. The main areas of work in this regard includes : instrument designing, pricing the issue, registration of the offer document, underwriting support, and marketing of the issue, allotment and refund, listing on stock exchanges. 2. Placement and distribution:the merchant banker helps in distributing various securities like equity shares ,debt instrument, mutual fund product, fixed deposit, insurance products, commercial paper to name a few. The distribution network of the merchant banker can be classified as institutional and retail in nature. the institutional network consist of mutual fund, foreign institutional investor, private equity funds, pension fund, financial institution etc. the size of such a network represents the wholesale reach of the merchant banker. The retail network depends on networking with investors. 3. Corporate advisory services:Merchant bankers offer customized solutions to their clients financial problems. The following are the main areas in which their advice is sought.

Merchant Banking

4. Financial structuring:-

Includes determining the debt-equity ratio and gearing ratio for the client, the appropriate capital structure theory is also framed. Merchant banker also explores the refinancing alternatives of the client and evaluate cheaper source of fund. Another area of advice is habilitation and turnaround management. In case of sick units, merchant banker may design a revival package in coordination with banks and financial institution. Risk management is another area where advice from a merchant banker is sought. He advice the client on different hedging strategies and suggest the appropriate strategy. 5. Project advisory service:-

Merchant bankers help their clients in various stage of project undertaken by the clients. They assist them in conceptualizing project idea in the initial stage. Once the idea is formed, they conduct feasibility studies to examine the viability of the proposed project. They also assist the client in preparing different document like the detail project report.

Merchant Banking

Scope for merchant banking in India:Scope for merchant banking depends upon size of the market, policies, restrictioncorporate



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 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 Banking

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.

6. Growth of Primary market: If the primary market grows and number of issues increases, the scope of merchant banking will be enhanced.

7. Entry of Foreign Investors: Now India capital market directly taps foreign capital through euro issues.FDI is increased in capital market. So Merchant bankers are required to advice them for their investment in India. The increasing number of joint ventures also requires expert services of Merchant Bankers. If more and more NRIs participate in capital market, there will be great demand for merchant banker services.

Merchant Banking


Merchant Banking

Services of Merchant Bankers in India:-

1. Corporate Counseling 2. Project Counseling 3. Loan Syndication 4. Management Of Capital Issues 5. Dealing In Secondary Market 6. Mutual Funds 7. Portfolio Management 8. Underwriters 9. Mergers / Amalgamations

Merchant Banking

Corporate Counseling

Corporate counseling denotes the advice provided by the Merchant Banking to the corporate unit to ensure better corporate performance in terms of image building among investors, steady growth through good working and appreciation in market value of its equity shares. The scope of corporate counseling, capital restructuring and, portfolio management and the full range of financial engineering includes venture capital, public issue

management, and loan syndication, working capital, fixed deposit, lease financing,

acceptance credit, etc.

However counseling is limited to only opinions and suggestions and any detailed analysis would form part of a specific service.

The scope of corporate counseling is restricted to the explanations of concepts, procedures and laws to be observed by the client company. Requirement of any action to be taken or compliance of statutory formalities to be made for implementation of those suggestions would demand for a specific type of service other than corporate counseling being offered by the merchant bankers. An academic analysis of corporate counseling present a different picture than that transpires from the literature of the merchant bankers Firstly corporate counseling is the beginning of the merchant banking service which every clients whether new or existing has got to avail a different matter whether

Merchant Banking

a merchant bank charges its client separately for rendering the corporate counseling service or includes the element of fee in the other heads of services but for the angle of priority. Corporate counseling is first in line of the services which a merchant banker offers and than other services.

Secondly the scope of the corporate counseling is very vast. Its coverage ranges from the managerial economies, investments and financial management to Corporate Laws and the related legal aspects of the organizational goals, locations factors, organizational size and operational scale, choice of product and market survey, forecasting of product, cost reduction and cost analysis, allocation of resources, investment decisions, capital management and expenditure control, pricing methods and marketing strategy, etc. As financial and investment experts, a merchant banker has to guide the corporate clients in areas covering financial reporting, project measurements, working capital management, financial requirements and the sources of finance, evaluating financial alternatives, rate of returns and cost of capital besides basic corporate changes of financial rearrangement, Reorganization, mergers and acquisitions, etc. are the areas to be covered.

Corporate laws should basically cover the legal aspects including the various legal formalities involved in areas of corporate finance being raised from the financial institutions, banks and the general public in the form of loan, new issues of equity or debentures respectively

Merchant Banking

Project Counseling
Project counseling services may be rendered independently or maybe, it relates to project finance and broadly covers the study of the project and offering advisory assistance on the project viability and procedural steps for its implementation broadly including following aspects:-

general review of the project ideas/ project profile, advice on procedural aspects of project implementation, review of technical feasibility of the project on the basis of the report prepared by own experts r by the outside consultants, selecting Technical consultancy Organization (TCO) for preparing project reports and market survey, or review of the project reports or market survey report prepared by the TCO, preparing project report form financial angle, and advice and act on various procedural steps including obtaining government consents for implementation of projects. This assistance can include obtaining of the following approvals/licenses/permission/grants etc form the govt. agencies viz. letter of intent, industrial license and DGTD registration and government approval for foreign collaboration.

In addition to above, the facility providing guidance to Indian entrepreneurs for making investment projects in India and in Indian joint ventures overseas is also covered under this activity.

Merchant Banking

Besides the above services, project counseling may include identification of potential investments avenues, precise capital structuring shaping the pattern of financing, arranging and negotiating foreign collaborations, amalgamations, mergers and takeover, financial study of the project and preparation of viability reports, to advice on the framework of institutional guidelines and laws governing corporate finance, assistance in the preparation of project profiles and feasibility studies based on preliminary project ideas in order to indicate the potential. These reports would cover the technical, financial and economic aspects of the project from the point of view of their acceptance by the financial institutions and banks; advising and assisting clients in preparing the applications for obtaining letters of intent, industrial license and DGTD registrations etc, seeking approvals from the government of India for foreign technical and financial collaboration agreements, guidance on investment opportunities for entrepreneurs coming to India.

Pre-investment studies are directed mainly for the prospective investor. These are the objective and detailed feasibility explanation of which the principal aim is to arm the clients with the sound foundation of facts and figures to evaluate the alternative avenues open for capital investments from the point of view of growth and profit prospects. Some of the critical issues that a study of this genre deals will include an in-depth investigation of environment and regulatory factors, location of raw material, supplies, demand projections and financial requirements. Such a study would assess the financial and economic viability of a given project and help the clients to identify and short list those projects that are built upon his inherent strength son as to accentuate corporate profitability and growth in long run.

Merchant Banking

Loan Syndication
Credit syndication also known as credit procurement and project finance services. The main task involved in credit syndication is to raise to rupee and foreign currency loans with the banks and financial institutions both in India and abroad. It also arranges the bridge finance and the resources for cost escalations or cost Overruns. Broadly, the credit syndications include the following acts; (a) Estimating the total costs (b) Drawing a financing plan for the total project cost-conforming to the requirements of the promoters and their collaborators. Financial institutions and banks, government agencies and underwriters. (c) Preparing loan application for financial assistance from term

lenders/financial institutions/banks and monitoring their progress including the pre-sanction negotiations. (d) Selecting the institutions and banks for participation in financing. (e) Follow-up of the term loan application with the financial institutions and banks and obtaining the satisfaction for their respective share of participation. (f) Arranging bridge finance.

(g) Assisting in completion of formalities for drawl of term finance sanctioned by institution expediting legal documentation formalities drawing up inter-se agreements etc. prescribed by the participating financial institutions and banks. (h) Assessing the working capital requirements. Preparing the necessary application for a successful issue management the close liaison and coordination with the various constituents of the public issue is an

Merchant Banking

essential condition that warrants full cooperation of all the parties affecting the cost and prospects f the issue. Merchant banks, acting as Manager to the issue has to settle the fee for Advocate/solicitors advice, accountants certification, brokers and banks charges, underwriters commission, printers charges and advertising and publicity expenses and coordinates with syndicated merchant bankers and principal brokers, stock exchanges, etc. The responsibility for all this rests upon the merchant banker. If proper coordination is not done, the success of the issue may be rendered unassured.

Merchant Banking

Management of Capital Issues

The capital issue are managed are category-1 merchant banker and constitutes the most important aspects of their services. The public issue of corporate securities involves marketing of capital issues of new and existing companies, additional issues of existing

companies including rights issue and dilution of shares by letter of offer.

The public issues are managed by the involvement of various agencies i.e. underwriters, brokers, bankers, advertising agency, printers, auditors, legal advisers, registrar to the issue and merchant bankers providing specialized services to make the issue of the success. However merchant banker is the agency at the apex level than that plan, coordinate and control the entire issue activity and direct different agencies to contribute to the successful marketing of securities. The procedure of the managing a public issue by a merchant banker is divided into two phases, viz;

(A) (B)

Pre-issue management Post-issue management

Merchant Banking


Pre-Issue Management:Steps required to be taken to manage pre-issue activity is as follows:(1) Obtaining stock exchange approvals to memorandum and articles of associations. (2) (3) Taking action as per SEBI guide lines Finalizing the appointments of the following agencies: Co-manager/Advisers to the issue Underwriters to the issue Brokers to the issue Bankers to the issue and refund Banker Advertising agency Printers and Registrar to the issue


Advise the company to appoint auditors, legal advisers and broad base Board of Directors

(5) (6)

Drafting of prospectus Obtaining approvals of draft prospectus from the companys legal advisers, underwriting financial institutions/Banks


Obtaining consent from parties and agencies acting for the issue to be enclosed with the prospectus.

(8) (9)

Approval of prospectus from Securities and Exchange Board of India. Filing of the prospectus with Registrar of Companies.

(10) Making an application for enlistment with Stock Exchange along, with copy of the prospectus. (11) Publicity of the issue with advertisement and conferences. (12) Open subscription list.

Merchant Banking


Post-issue Management:Steps involved in post-issue management are:(1) To verify and confirm that the issue is subscribed to the extent of 90% including devolvement from underwriters in case of under subscription (2) To supervise and co-ordinate the allotment procedure of registrar to the issue as per prescribed Stock Exchange guidelines (3) To ensure issue of refund order, allotment letters / certificates within the prescribed time limit of10 weeks after the closure of subscription list (4) To report periodically to SEBI about the progress in the matters related to allotment and refunds (5) (6) To ensure he listing of securities at Stock Exchanges. To attend the investors grievances regarding the public issue

The Merchant Bankers for managing public issue can negotiate a fee subject to a ceiling. This fee is to be shared by all lead managers, advisers etc. 0.5% of the amount of public issues up to Rs.25 crores 0.2% of the amount exceeding Rs.25crores, if more than one Merchant bankers are managing the issue.

Merchant Banking

Mutual Funds
A Mutual Fund is a special type of investment institution which collects or pools the savings of the community and invests large funds in variety of Blue-chip Companies which are selected from a wide range of industries with the objects of maximizing returns/incomes on investments. E.g. Unit Trust of India (UTI), Sri Ram Mutual Fund, Morgan Stanley Growth Fund (foreign mutual fund), etc.

Mutual Funds are basically a trust which mobilize savings from the people and invest them in a mix of corporate and government securities. Money collected by the investors is invested in various issues of primary and secondary markets in order to gain profits on such investments

It is a Trust, which combines the investments of various investors having similar financial goals. The Trust issues units to the investors in the proportion of their investments. A fund manager then invests these funds in different types of assets, which provide returns in the form of dividends, interests, and capital appreciation. This is distributed to the various investors in the proportion of their contribution to the pool funds.

Ordinary investors, who want to invest their savings, neither understand the complexities of financial markets nor have the time to watch, research, and analyze different equities, securities or any other investments opportunities that are available in the market.

Merchant Banking

At present, all the markets viz. the debt market, the equity market, the money market, real estates, derivatives, and the market dealing with the other assets have now reached a stage where a minimal information affect the markets. Besides this, the economy has opened up and global events influence their performance.

It is very difficult for a lay person to keep track of various investments, transactions, brokerages etc.

In the present scenario mutual funds are some of the most efficient financial instruments as it offers above services like managing investments at a very low cost.

Merchant Banking

Portfolio Manager

Portfolio managers are defined as persons who, in pursuance of a contract with client, advise/ direct undertake on their behalf the management/ administration of portfolio of securities/ funds of clients. The term portfolio means the total holding of securities belonging to any person. The portfolio management can be Discretionary: the first type of portfolio management permits the exercise of discretion in regard to investment/ management of the portfolio of the securities /funds. Non-discretionary: the non-discretionary portfolio manager should manage the funds in accordance with the direction of client.

In order to carry on portfolio management services, a certificate of registration from SEBI is mandatory. But for category 1 and 2 merchant banker a separate registration is not required to act as a portfolio manager. They have, however, to carry on the portfolio management activity within the framework of SEBI regulations applicable to portfolio managers. The SEBI regulations are

Merchant Banking

applicable to portfolio manage.The SEBI is authorized to grant and renew certificate of registration as a prior permission to portfolio managers on the payment of the requisite registration/renewal fee. A certificate/ renewal of registration is valid for three years. An application for renewal must be made three months before the expiry of the validity of the certificate. The annual registration fee payable to SEBI was Rs 2.5 lakh for the first two year and Rs. 1 lakh for the third year. The renewal fee was rs 75,000 per annum. After November 1999, the registration fee and renewal fee after every three years in Rs. 5 lakh respectively. The portfolio manager is also to give an undertaking to take adequate steps for the redresses of grievance of clients within one month of the receipt of complaint, keep SEBI informed about the number, nature, and other particular of complaints and abide by its rules and regulations.

Merchant Banking

Another important intermediary in the new issue/primary market is the underwriters to the issues of capital who agree to take u securities which are not fully, subscribed. They make a

commitment to get the issue subscribed either by other or by them. Through underwriting is not mandatory after April 1995, its organization is an important element of the primary market. Underwriters are appointed by the issuing companies in consultation with the lead manager/ merchant banker to the issues. A statement to the effect that in the opinion of the lead manager, the underwriters asset are adequate to meet their obligation should be incorporated in the prospectus certificate. Registration To act as underwriter, a certificate of registration must be obtained from the SEBI in granting the registration, the SEBI considers all matters relevant relating to the underwriting and in particular, a. The necessary infrastructural like adequate office space, equipment and manpower to effectively discharged the activity: b. Past experience in underwriting/ employment of at least two persons with experience in underwriting: c. Any person directly/ indirectly connect with the applicant is not registered with the SEBI as underwriter or previous application of any such person has been rejected or any disciplinary action has been taken against such person under the SEBI act/rules/regulation.

Merchant Banking

d. Capital adequacy requirement of not less than the net worth ( CAPITAL + free reserve) of Rs. 20 lakh: and e. The applicant/ director/ principle officer/ partner has been convicted of offence involving moral turpitude or found guilty of any economic offence. Fee underwriters, had to, for grant or renewal of registration, pay a fee to the SEBI from the date of initial grant of certificate, Rs 2 lakh for the first and second year and Rs 1 lakh for the third year. A fee of Rs 20,000 was payable every year to keep the certificate in force or for its renewal. Since 1999 the registration fee has been raised to Rs 5 lakh. To keep the registration in force, renewal fee of Rs 1 lakh. Every three years from the fourth year the date of initial registration is payable. Failure to pay the fee would result in the suspension of the certificate of registration.

Merchant Banking

Mergers /Amalgamation:

The terms merger and amalgamation are used interchangeably as a form of business organization to seek external growth of business. A merger is a combination of two or more firms in which only one firm would survive and the other would cease to exist, its asset/ liabilities being taken over by surviving firm. And amalgamation is an arrangement in which the asset/liability of two or more firm to form a new entity or absorption of one/more firm with another.

The outcome of this arrangement is that the amalgamating firm is dissolved/wound-up and losses it identity and its shareholders become shareholders of the amalgamated firm. Although the merger/amalgamation of firm in India is governed by the provision of the companies act, 1956, it does not defined this term. The income tax act , 1961, stipulates to pre-requisite for amalgamation through which the amalgamated company seeks to avail the benefit of set of / carry forward of losses and unabsorbed depreciation of the amalgamating company against its future profits u/s 72A ,namely,


All the property and liabilities of the amalgamated company / companies

immediately before amalgamation should vest with/ become the liabilities of the amalgamated company and

The shareholders other than amalgamated company/its subsidiary holding

at list 90% value of shares/ voting power in the amalgamating company should

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become shareholders of the amalgamated company by virtue of amalgamation. The scheme of merger, income tax implications of amalgamation and financial evaluation are discussed in the section.

Following the economic reforms in India in the post-1991 period, there is a discernible trend among promoters and established corporate group towards consolidation of market share and diversification into new areas through acquisition/takeover of companies but in a more pronounced manner through mergers/amalgamation. Although the economic consideration in terms of motive and effect of these are similar, the legal procedure involved is difficult. The merger and amalgamation of corporate constitute a subject matter of the companies act, the courts and law and there are well-laid down procedure for valuation of share and right of investor. The acquisition/takeover bids fall under the purview of SEBI. The terms merger and amalgamation on the one hand and acquisition and takeover on the other are treated here synonymously. Section one of the chapter covers the framework of merger/amalgamation including financial evaluation. The regulatory framework governing acquisition/takeover is described in section two.

Merchant Banking


Merchant Banking


MERCHANT BANKER without holding a certificate of registration granted by the Securities and Exchange Board of India cannot act as a merchant banker. SEBI will grant certificate to Merchant banker if it follows the following condition:-

Merchant banker should be a body corporate and should not be non banking finance company They must have a necessary infrastructure for maintaining an office

They must have employed a minimum of 2 persons with experience in merchant banking business.

They should not be connected with any company directly or indirectly.

Merchant Banking

Procedure for getting registration

An application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations, 1992.

SEBI shall consider the application and on being satisfied issue a certificate of registration in Form B of the SEBI (Merchant Bankers) Regulations, 1992

Rs. 5 lakhs should be paid within 15 days of date of receipt of intimation regarding grant of certificate

t he certificate is valid only for a period of 3 years

Three months before the expiry period, an application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations, 1992. SEBI shall consider the application and on being satisfied renew certificate of registration for a further period of 3 years.

Failing to pay registration fees

Rs. 2.5 lakhs which should be paid within 15 days of date of receipt of intimation regarding renewal of certificate.

Cancellation of certificate

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The capital requirement depends upon the category. The minimum net worth requirement for acting as merchant banker is given below: Category I Rs. 5crores Category II Rs, 50lakhs Category III Rs. 20lakhs Category IV Nil

The categories for which registration may be granted are given below

Category I to carry on the activity of issue management and to act as adviser, consultant, manager, underwriter, portfolio manager.

Category II - to act as adviser, consultant, co-manager, underwriter, portfolio manager.

Category III - to act as underwriter, adviser or consultant to an issue

Category IV to act only as adviser or consultant to an issue

Merchant Banking

Obligations and responsibilities

Code of conduct:Every merchant banker has to abide by the code of conduct as specified below. A merchant banker in the conduct of his business has to observe standards of integrity and fairness of all his dealings with the clients and other merchant bankers. He ought to render at all times high standards of service, exercise due diligence, ensure proper care and exercise independent professional judgment. He has to, wherever necessary, disclose to his clients, the possible sources of conflict of duties and interest, while providing services. He cannot made any statement or become privy to any act, practice unfair competition, which is likely to be harmful to interest of other merchant bankers or is likely to place such other merchant banker in a disadvantageous position in relation to him, while competing for, or executing, any assignment. He should not make any exaggerated statement, whether oral or written, to the client either about his qualification or his capability to other clients. A merchant banker always to endeavors to: 1) Render the best possible advice to the clients regarding clients the needs and requirements, and his own professional skill; and 2) Ensure that all professional dealing are affected in prompt, efficient and cost effective manner

He should not:1) Divulge to other clients, press or any other party any other party confidential information about his client, which has come to his knowledge; and

Merchant Banking

2) Deal in the securities of any client company without making disclosure to the SEBI as per the regulations and also the Board of Directors of the client company.

He should endeavor to ensure that:1) The investors are provided with true and adequate information without making any misguided or exaggerated claims, and are made aware of attendant risks before any investment decision is taken by them;

2) The copies of prospectus, memorandum and related literature are made available to the investors

3) Adequate steps are taken for the fair allotment of securities and refund of application money without delay; and

A merchant banker should not generally and particularly in respect of the issue of any securities be part to a) Creation of false market; b) Price rigging or manipulations; and c) Passing of price sensitive information to brokers, members of stock exchanges and other players in the capital market or take any other action which is unethical or unfair to the investors.

Finally, he has to avoid by the provisions of the SEBI Act, its rules and regulations which may be applicable and relevant to the activities carried on by the merchant banker.

Merchant Banking

Restriction on Business:No merchant banker, other than a bank/public financial institution (PFI) is permitted to carryon business other than that just in the securities market with effect from December 9, 1997. However, a merchant banker who is registered with RBI as a Primary Dealer/Satellite Dealer may carry on such business as may be permitted by RBI with effect from November 1999.

Maximum Number of Lead Managers :The maximum number of lead manager is related to the size of the issue. For an issue of size less than Rs.50 crores, two managers are appointed. For size groups of Rs.50 cores to Rs.100 cores and Rs.100 crores to Rs.200 crores, the maximum permissible lead managers are three and four respectively. A company can appoint five and five or more (as approved by the SEBI) lead managers in case of issues between Rs.200 corer and above Rs.400 crores respectively.

Responsibilities of Merchant Banker:Every lead manager has to enter into an agreement with the issuing companies setting out their mutual rights, liabilities, and obligation relating to issue and in particular to disclosures, allotment and refund. A statement specifying these is to be furnished to SEBI at least one month before the opening of the issue for subscription. In case of more than one-lead manager/Merchant banker, the statement of has to provide details about their respective responsibilities. A lead merchant banker cannot manage an issue if the issuing company is its associate. He can also not associate with a merchant

Merchant Banking

banker who does not hold a certificate of registration with the SEBI. It is necessary for a lead manager to accept a minimum underwriting obligation of 5% of the total underwriting commitment or Rs.25 laky whichever is less. If he is unable to do so, he has to make arrangements for an underwriting of an, equal amount by a merchant banker associated with that issue under intimation to SEBI.

Due Diligence certificate:The lead manager is responsible for the verification of the content of a prospectus/letter of offer in respect of an issue and the reasonableness of the views expressed in them. He has to submit to the SEBI at least two weeks before the opening of the issue for subscription a due diligence certificate to the effect that a) The prospectus/letter of after is in conformity with the

documents/materials and papers relevant to the issue, b) All legal requirements connected with the issue have been fully

complied with, and c) The disclosure is true, fair and adequate to enable the investors to

make a well-informed decision as to the investment in the proposed issue.

Submission of Documents:The lead managers(s) to an issue has (have) to. Submit at least two weeks before the date of filing with the registrar of companies/regional stock exchange or both particulars of the issue, draft prospectus/letter of offer, other literature to be circulated to the investors/shareholders, and so to the SEBI. They have to ensure that the modifications/suggestion made by it with

Merchant Banking

respect to the information to be given to the investors is duly incorporated. The draft prospectus/draft letter of offer should be submitted to the SEBI along with the prescribed fee specified below:-

Issue size including premium and intended retention oversubscription Up to Rs.5 crores

Fee per document

Rs 10,000

Rs 5 cores- Rs 10 crores

Rs 15,000

Rs 50 cores- Rs 50 cores

Rs 25,000

Rs 10 cores- Rs 100 cores

Rs 50,000

Rs 100 cores- Rs 500 cores

Rs 2,50,000

More than Rs 500 corer

Rs 5,00,000

They have to continue to be associated with the issue till the subscribers have received the share debentures certificate or the refund of excess application money.

Acquisition of shares a merchant banker is prohibited from acquiring securities of any company on the basis of unpublished price sensitive information obtained during the course of any professional assignment either

Merchant Banking

from the client or otherwise. He has to submit to the SEBI the complete particulars of any acquisition of securities of a company whose issue is being managed by him within 15 days from the date of the transaction.

Disclosures to SEBI:As and when required, a merchant banker has to disclose to the SEBI: I) His responsibilities with regard to the management of the issue,


Any changes in the information/particulars previously furnished which have a bearing and the certificate of registrations granted to it.


The names of the companies whose issues he has managed or has been associated with,


The particulars relating to breach of capital adequacy requirements and


Information relating to his activities as manager, under writer, consultant or adviser to an issue.

Merchant Banking


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: a) If any Companys other income exceeds 10 per cent of the total income,

the details should be disclosed. 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. c) The Company should also disclose the information regarding the capacity

utilization of the plant for the last 3 years. d) The Promoters of the Company must maintain their holding at least at 20

per cent of the expanded capital. e) The minimum application money payable should not be less than 25 per

cent of the issue price.

Merchant Banking


The company should disclose the time normally taken for the disposal of

various types of investors grievances. g) The Company can make firm allotments in public issues as follows: Indian mutual funds (20%), FIIS (24%), Regular employees of the company (10%), Financial institution (20%). h) 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. i) According to the guidelines, in case of the public issues, at least 30

mandatory collection centers should be established. j) 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. k) The Company should also disclose about the fee agreed between the lead

managers and the Company in the memorandum of understanding.

Merchant Banking

About AMBI
In the early 1990s, the merchant banking industry in India witnessed a phenomenal growth with over 1,500 merchant bankers registered with SEBI. In order to ensure the well being of the industry and for promoting healthy business practices, it became necessary to set up a Self Regulatory Organization within the industry. This led to the birth of the Association of Merchant Bankers of India (AMBI). It was promoted to exercise overall supervision over its members in the matters of compliance with statutory rules and regulations pertaining to merchant banking and other activities.

AMBI was granted recognition by SEBI to set up professional standards, for providing efficient services and to establish standard practices in merchant banking and financial services. AMBI, in consultation with SEBI, is working towards improving the compliance of statutory requirement in a systematic manner. AMBI's primary objective is to ensure that its members render services to all its constituents within an agreed framework of ethical principles and practices. It also works as a trade body promoting the interests of the industry and of its members.

The spectrum of AMBI's activities is wide. It is the nodal point for the assimilation and dissemination of information relating to the merchant banking industry. Thus AMBI ensures that its members are aware of the latest rules/guidelines issued by various statutory authorities, as also other matters of interest. AMBI is the merchant banking industry's sole representative to all statutory authorities, in particular, SEBI. The Chairman of AMBI is on the Primary Market Advisory Committee of SEBI.

Merchant Banking

To ensure healthy competition within the industry, AMBI has published its Code of Conduct for Merchant Bankers. This document sets out the broad parameters and the spirit in which the members of AMBI should conduct business. AMBI has also produced a Due Diligence Handbook, which has proved to be a useful tool for merchant bankers. This handbook is currently under revision. For the benefit of investors, AMBI has brought out an Investor's Education Handbook

Concurrent with the activity of educating investors; AMBI regularly conducts/sponsors talks and seminars on financial matters. AMBI regularly submits a Pre-Budget Memorandum to the Finance Ministry. This memorandum expresses the concerns of the industry and requests specific changes in various financial legislations that would help better the range of services and opportunities provided by the industry. AMBI is also the intra-industry arbitrator on all matters arising between its members.

Merchant Banking



Merchant Banking

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 Government/State Government 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.

Merchant Banking

(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.

(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.

Merchant Banking

Development stages of Merchant Banking firms

In the merchant banking organization in the following chart, the firm of merchant banker and individual stock broker have been included as they have been contributing jointly to the growth of the profession of merchant banking. But most of these firms are not well developed to show stage of maturity. Most of them are still in the start-up and early growth stages. This is easily dissemble from the following projection of the development stages


Stages in development of merchant banking

Organizational setup

Principal financing source

Very loose organization, 1 Start-up founders and associates involved in the management Own investment

Emerging formal 2 Early growth organization, founders, or professional manager in management Formal organization with 3 Accelerating growth professional, manager or founder Complex organization with professional manager Firms investment with banks backing in terms of loan Corporate finance from bank plus equity funds from public Matching finance available from all possible sources Individual investment

Sustaining growth


Multilayer complex management organization

Merchant Banking


Merchant Banking

Level of Competition
The rapid growth in the primary capital market has led to an even greater proliferation of Merchant Bankers. The number of Merchant Bankers has increased from only 33 in the year 1989-90 to 405 in 1993-94. Presently, the number of Merchant Bankers in different categories registered with SEBI is 501 (August 1994). Considering a total number of public issues in the year 1994-95, a Merchant Banker on average viedlor 3.5 issues. Therefore a tough competition exists in the line off issue management. The high level of competition in Merchant Banking business especially issue management is evident from the fact that out of 140 Category-I merchant Bankers in 1992-93 only 66 were able to manage an issue.

Merchant Banking business is handled by a few established players and for the others there is a heavy competition. Therefore, their survival dependent on innovative capital issue structuring and other income generating activities like leasing, high-purchase, investments and dealings in secondary market operations.

As a result of liberalization and globalization, competition in corporate sector is becoming intense. For their survival and growth, companies are reviewing their strategies, structures and functioning. This had led to corporate restructuring including mergers, acquisitions, splits, divestments and financial restructuring. This area of corporate advisory services which is largely in the hands of private consultancy firms, also offers good opportunity to Merchant Bankers to extend the area of operations.

Merchant Banking

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. 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

Merchant Banking

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 crores in the next four years.

"The bank has set a target to expand total business to Rs10crore and earn net profit of Rs7, 500 crores 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.

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

Merchant Banking

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.

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.

Merchant Banking

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 of fees has been declined to 1.21 per cent so far this year from 2.24 per cent in 2007, the report ad

Reliance Power IPO of Rs 11,563 crores during this year with the merchant banking fee of Rs 50.6 crores, 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 Banking

merchant banking license 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.

Merchant Banking

Union Bank of India has been around for more than 88 years. The bank has earned a reputation for being techno-savvy--more than 600 branches of Bank are networked and powered with a centralized technology platform, the bank also manages close to 395 networked ATMs. Union Bank is a Public Sector Unit with 55.43% Share Capital held by the Government of India. The Bank came out with its Initial Public Offer (IPO) in August 20, 2002 and Follow on Public Offer in February 2006. Presently 44.57 % of Share Capital is presently held by Institutions, Individuals and Others.

Financial performance (as on 31st march 10)

The Banks Net Worth increased by 25.76% and stood at Rs. 8758 crore st as on 31 March 10 as compared to Rs.6964 crore in the previous year. Net Profit Increased by 27.47% and stood at 594 crore as on 31 March 10 as compared to 466 crore crore in the previous year. st Gross NPA level increased to Rs.2671 crore as on 31 March10 from Rs.1923 crore as on 31 March09.
st st

Board of Directors
SHRI M.V.NAIR (Chairman & Managing Director) Shri S.C.Kalia(Executive Director) SHRI S.Raman(Executive Director) Dr. Gulfam Mujibi(Part-time non-official Director) Shri B.M.Sharma(Chartered Accountant Director) SHRI N. SHANKAR (WORKMEN DIRECTOR)

Merchant Banking

Products and Services

Personal Banking (Accounts & Deposits, Retail , Loans, Cards, Insurance & Investment, Demat ) NRI Banking(Remittance, Savings & Deposits, Loan & Services, Payments) Corporate Banking(CMS, E-Tax, Insurance, Trade Finance, loans Syndication, MSME Banking) Internet Banking (Account Information, Transfer of Funds/Bills/Limits/Currency. Financial & Non Financial enquiries)

The Bank was awarded the Gold Trophy and a certificate in the Elite Class for Excellence in Marketing & Brand Communication by Association of Business Communicators of India (ABCI) in March 2010. The award was given away by the Honble Governor of Maharastra, Shri K.Sankaranarayan. The Bank was awarded the prestigious Skoch Challenger Award 2009 for excellence in capacity building through innovative concept of Village Knowledge Centre as part of financial inclusion initiatives. The award was given away by Dr. C Rangarajan, Economic advisor to the Prime Minister th As part of its global expansion initiatives, the Bank opened its 5 overseas representative office in London, U.K. in April 2010. The Bank already has 4 representative Offices in Shanghai, Beijing in PRC, Abu Dhabi in UAE and Sydney, Australia. Besides the Bank has a full fledged overseas branch in Hong Kong. The Bank is the process of setting up a Rep Office in Toronto, Canada.

Merchant Banking

The merchant banking business has increased over a short period of time and with continued economic reforms. However, a stiff competition exists in this line and survival will depend upon the financial skills and spectrum of financial services and instruments offered by the Merchant Banker. Hence, Merchant Banking Service is taking shape for turbulent times. Merchant banking is an activity initially undertaken by a few large commercial banks in India, and it is now being adopted or undertaken by a few large commercial banks in India, and it is now being adopted or undertaken by practically every commercial bank through its Merchant Banking Department. The range of activities covered under merchant banking very wide indeed. The merchant banks offer a package of financial services. Unlike in the past, their activities are now primarily non-fund based. Therefore, they do not require much capital. One of the basic requirements of merchant banking is a highly professional staff and worldwide contacts. Merchant banking is usually international in character.

Merchant Banking


Merchant Banking

Analysis & Interpretation Q 1 Do you take any financial services from bank?
Sr. No. 1 2 Take Financial Service Yes No Total Nos. 36 44 80 Percentage 45 55

Take Financial Service

45% 1 Yes 2 No 55%

Out of total respondents, 45% respondents have taken Financial Service and rest 55% respondents have not taken the Financial Service.

Merchant Banking

Q 2 Do you Know about Merchant Banking?

Sr. No. 1 2 Know about Merchant Yes No Total Nos. 32 48 80 Percentage 40 60

Know about Merchant

2 No, 60 60 50 40 30 20 10 0 Nos. 1 Yes, 40 1 Yes 2 No

Out of total respondents, 40% respondents Know about merchant banking and rest 60% respondents dont know about merchant banking.

Merchant Banking

Q 3 Are you satisfied with the services provided by your bank?

Sr. No. 1 2 Satisfied Yes No Total Nos. 35 45 80 Percentage 43.75 56.25 100

60 50 40 30 20 10 0 Percentage Percentage, 43.75

Percentage, 56.25

1 Yes 2 No

Out of total respondents, 43.75% respondents Satisfied and rest 60% respondents dont Satisfied.

Merchant Banking

Q4 Are you satisfied with services offered by banks?

Sr. no 1 2 3 4 5 Bank ICICI SBI PNB BOI Other Percentage 20 35 20 15 10

40 35 30 25 20 15 10 5 0 icici sbi pnb boi any other icici sbi pnb boi any other


Large no. of companies takes financial services from SBI.

Merchant Banking

Q 5 What is the position of Merchant Banking in Private Sector? 1 2 3 Position Good Normal Bad Total Percentage 50 35 15 100


Bad 3 15% Normal 2 35% Good 1 50% 1 Good 2 Normal 3 Bad

Out of total respondents, 50% respondents Say Good, 35% Say Normal and rest 15% respondents say bad.

Merchant Banking

Q 6 What is the position of Merchant Banking in Public Sector? 1 2 3 Position Good Normal Bad Total Percentage 40 55 5 100




1 Good 2 Normal 3 Bad


Out of total respondents, 40% respondents Say Good, 55% Say Normal and rest 5% respondents say bad.

Merchant Banking

i. ii. iii. iv.

Financial Services Management(T.Y.BCBI) RESEARCH METHODOLOGY BY C.R. KOTHARI Financial Institutions & Market By Shashi K. Gupta, Nisha Aggarwal INTERNET http:/

Merchant Banking

Respondents Profile Name Age Gender :_______________ :_______________ :_______________

Occupation :_______________ 1. Do you take any financial services from bank? (a) Yes ( ) (b) NO ( )

2. Do you know about Merchant Banking? (a) Yes ( ) (b) No ( )

3. Are you satisfied with the services provided by your bank? (a) Yes ( ) (b) No ( )

4. Which bank provides you maximum services? (a) ICICI (c) PNB ( ) ( ) (b) SBI (d) BOI ( ) ( )

(e) OTHER(specify) 5. What is the position of Merchant Banking in Private Sector? (a) Good (c) Bad ( ( ) ) (b) Normal ( )

6. What is the position of Merchant Banking in Public Sector? (a) Good (c) Bad ( ( ) ) (b) Normal ( )

Merchant Banking