CHAPTER-I

I
NTRODUCTI
ON
Abst
ract
Thi
spaperexami
nest
her
ecentdev
elopment
sinmer
chantbanki
ng.Mer
chantbanki
ng
hasanessent
ial
rol
etopl
ayi
ntoday
’seconomy
.Theyassi
stcompani
esi
nnumer
ous
way
s.Al
lbusi
nessesai
m atgener
ati
ngt
hemosti
ncomeoutoft
hei
rfunds.Mer
chant
banker
shel
pthesecompani
est
out
il
izet
hei
rfundspr
oper
lyandgr
ow.
Mer
chantbanki
s
af
inanci
ali
nst
it
uti
onpr
ovi
dingcapi
tal
tocompani
esi
nthef
orm ofshar
eowner
shi
p
i
nst
eadofl
oans.Amer
chantbankal
sopr
ovi
desadv
isor
yoncor
por
atemat
ter
stot
he
f
ir
msi
nwhi
cht
heyi
nvest
.Mer
chantbanki
ngi
sani
mpor
tantser
vicepr
ovi
dedbya
numberoff
inanci
ali
nst
it
uti
onst
hathel
psi
nthegr
owt
hoft
hecor
por
atesect
orwhi
ch
ul
ti
mat
elyr
efl
ect
sint
otheov
eral
leconomi
cdev
elopmentoft
hecount
ry.Mer
chant
bankswer
eexpect
edt
oper
for
m sev
eral
funct
ionsl
i
kei
ssuemanagement
,under
wri
ti
ng,
por
tfol
i
omanagement
,loansy
ndi
cat
ion,
consul
tant
,adv
isorandhostofot
heract
ivi
ti
es.
Mer
chantbanki
ngi
sacombi
nat
ionofbanki
ngandconsul
tancyser
vices.
Thi
sst
udyhel
pst
ounder
standt
hei
mpr
ovement
sandheadway
sinmer
chantbanki
ng.

KeyWords:
Merchantbanki
ng,
Financi
ali
nst
it
uti
ons,
Secur
it
ies
management

1.
1Or
igi
ninGener
al:
Thet
erm Mer
chantBank(
MB)hasi
tsor
igi
nint
hemer
chant
ing
act
ivi
ti
esoft
he13t
hcent
ury
.Dur
ingt
hisper
iod,
afewf
ami
l
iesowned
andmanagedf
ir
ms,
whi
chengagedi
ncoast
alt
radeandf
inance,
star
ted
spr
eadi
ngt
hroughoutt
heEur
opeancont
inent
.Thef
ir
stsuchknown
f
ir
mswer
e‘Ri
ccar
diofLuccaMedi
ci’
and‘
Fugger
’1
Pr
inci
pal
l
y,t
hesemer
chant
swer
eengagedi
nov
erseast
rade.
Theyusedt
hei
rownorchar
ter
edshi
pst
otr
anspor
tmanuf
act
uredgoods
f
rom t
hedev
elopedcount
ri
esofEur
opet
othecount
ri
esofNor
thand
Sout
hAmer
icaandFarEast
.Theysol
dthegoodsei
therdi
rect
lyor
i
ndi
rect
lyt
hroughl
ocal
agent
sort
hrought
hei
rof
fi
cessetupi
nthose
count
ri
es.Thesebr
ancheswer
emanagedbyt
hemer
chant
s"own
f
ami
l
ies.
2Ini
ti
all
y,t
hepr
oduct
swer
eexchangedf
ort
hei
ndi
genous
pr
oduct
sundera‘
bar
tersy
stem’
oft
radi
ng.Ov
ert
hey
ear
s,Mer
chant
Banker
sdev
elopedanet
wor
kofov
erseasconnect
ionsi
nint
ernat
ional
t
radeandst
art
edbuy
ingont
hei
rbehal
finEur
ope.
3
Lat
eron,
thef
ir
msst
art
edbanki
ngact
ivi
ti
esi
naddi
ti
ont
othei
r
t
radi
ngact
ivi
ti
es.Theov
erseasconnect
ionsbr
oughtt
hem t
hebanki
ng
cl
i
ent
s,whodeposi
tedt
hesal
epr
oceedsoft
hei
rpr
oduct
sinEur
ope.

Thr
ought
hesemer
chantbanker
s,t
heov
erseascust
omer
sbecame
i
nvest
orsi
nUKandst
art
edi
nvest
ingi
nshar
esandbondsoft
he
ov
erseascount
ri
es.
4Thef
ait
hint
heset
rader
sfaci
l
itat
edt
heexpl
osi
on
ofi
nter
nat
ional
inv
est
ment
.
Fur
ther
,thesef
ir
msal
soengagedi
nfi
nanci
ngki
ngsofEur
opean
St
ates,
Monar
chsandSt
ateGov
ernment
swhoengagedi
ncont
inued
war
s5t
her
ebybor
neal
lther
isksassoci
atedwi
thi
t.Anot
herr
easonf
or
suchadev
elopmenti
nthoseday
swast
hatweal
thconcent
rat
edmost
ly
i
nthehandsofav
eryf
ewpeopl
e.Ther
efor
e,i
nst
eadofbor
rowi
ngt
he
sav
ingsoft
hegener
alpubl
i
c,t
heki
ngsandpr
incesgott
hei
rmoneyby
ar
rangi
ngl
oanswi
thbi
gmer
chantbanker
s.
Thehi
ghpr
ofi
tabi
l
ityi
nthei
nit
ial
stagesmadet
hesemer
chant
banker
stol
endaggr
essi
vel
ytoki
ngs,
monar
chs,
etc.Howev
er,
the
i
ncr
easedi
nci
denceofbaddebt
s,denouncementofobl
i
gat
ionsby
debt
ors,
etc.
,madeear
lybegi
nner
s,v
iz.
,Ri
ccar
di,
Medi
ci,
Fugger
,et
c,,
ei
thert
ocl
osedownorsuf
ferheav
ylosses.
6Howev
er,
afewot
her
s
cont
inuedwi
thbi
tt
erexper
iencest
il
l16t
hcent
ury
.
TheconceptofMer
chantBanki
ngowesi
tsgenesi
stot
heDut
ch,
whower
especi
ali
sedi
nthet
radeandf
inance,
dur
ing17t
handmostof
t
he18t
hcent
ury
.Theemer
genceof‘
Bri
ti
sh’
asdomi
nantcompet
it
ors
i
ntr
ade,
compel
l
edt
heAmst
erdam t
rader
stoshi
ftt
hei
rcapi
tal
to
f
inanci
aldeal
i
ngswher
eint
heydev
elopedsev
eral
financi
ali
nst
rument
s
f
orf
aci
l
itat
ingt
hei
nter
nat
ional
trade.Wi
thsuchashi
ft
,the‘
Dut
ch
f
inanci
ersst
art
edappoi
nti
ng‘
LondonMer
chant
s’ast
hei
ragent
s,
t
her
ebymaki
ngt
hebegi
nni
ngof‘
i
nter
nat
ional
houses’
whi
chwer
e
i
nst
rument
ali
nexpandi
ngt
hei
nter
nat
ional
tradei
nthe19t
hcent
ury
.
TheFr
enchwarf
orcedt
hemer
chant
stof
leet
oLondonwi
th
t
hei
rmer
cant
il
eexper
ti
se,
capi
tal
andspeci
fi
ctr
adi
ngexper
ience
whi
chal
sohel
pedt
hedev
elopmentof‘
mer
chantbanki
ngt
ri
be’
.
8Int
he
l
aterper
iods,
ther
etookpl
aceasepar
ati
onbet
weent
radi
ngandf
inance
f
orv
ari
ousr
easons.
Thel
aterdev
elopment
sledt
ofur
therr
efi
nementoff
inanci
al
act
ivi
ti
es.TheAmer
icanRev
olut
ionar
yWarandNapol
eonwar
s
cr
usheddownt
hemer
chanthousesofLi
ver
pool
andLondon,
resul
ti
ng
i
ntoabr
upti
ncr
easei
nbankr
upt
cyr
ate.Thi
sgav
eani
mpet
ust
othe
emer
genceof‘
Commi
ssi
onAgent
s’and‘
Accept
anceHouses’
9for
med
byt
hef
orei
gncommer
cial
cent
resasspeci
ali
stsi
nthepur
efi
nance
f
unct
ions.
‘
Accept
anceHouses’
wer
ethest
eppi
ngst
onesi
nthedev
elopment
ofmer
chantbanki
ng.Theypr
ovi
ded‘
breadandbut
ter
’10t
othe
mer
chantbanker
s.Dur
ing18t
hcent
uryandear
ly19t
hcent
ury
,thet
rade
bet
weent
hecount
ri
eswasf
inancedbybi
l
lsofexchangedr
awnon
pr
inci
pal
mer
chant
inghouses.Ast
hei
nter
nat
ional
tradegr
ewandandi
ot
herl
esserknownnamesent
eredt
hei
nter
nat
ional
trader
egi
me,
the
est
abl
i
shedmer
chant
s‘l
entt
hei
rnames’
byagr
eei
ngt
oacceptbi
l
lsof
exchangeont
hei
rbehal
f,f
oracommi
ssi
on.Accept
anceHouses'
busi
ness,
thus,
becamet
he‘
hal
l
mar
k’oft
rueMB.
11

2HI
1. STORI
CALBACKGROUNDOFMERCHANTBANKI
NG
Theconceptof‘
HUNDI
’remai
nst
hehal
l
mar
kofmer
chant
banki
ngact
ivi
ti
esi
nIndi
asi
ncet
het
imei
mmemor
ial
.
19The
‘
i
ndi
genousbanker
s’whocar
ri
edont
hei
rpr
ofessi
ononher
edi
tar
y
basi
s,usedt
orecei
vedeposi
ts,
deal
inhundi
esandper
for
m ot
her
f
unct
ions.Theycombi
nedmoneyl
endi
ngandt
radi
ngbydi
scount
ing
hundi
esr
elat
edt
ofi
nance,
indust
ryandt
rade.
Hi
stor
ical
Backgr
oundt
heGr
owt
hofmer
chantBank.
ThomasSki
nner
sAnnual
Dir
ect
ori
es‘
TheLondonBanks(
1880)
'
madeani
nter
est
ingst
udyont
heor
igi
nandgr
owt
hofmer
chantbanki
ng
act
ivi
ti
esi
nIndi
a.The‘
AgencyHouse’
wast
het
radi
ti
onal
namegi
ven
t
omer
chantbanki
ngi
nIndi
aandi
ntheFarEast
.Dur
ing1813,
the
t
radeandcommer
cedev
elopedi
nIndi
athr
ought
heLondonbased
agencyhouses,
viz.
,JohnPal
mer&Co.
,Edwar
dBoust
ed,
Mat
hesons,
DentPar
merandCo.
,Dav
idSassoonandE.
D.Sassoon&Co.
20
Theseagencyhousesl
entl
oanst
olocal
mer
chant
sbyr
ecy
cli
ng
t
hei
rhomer
esour
cesandt
hedeposi
tsofI
ndi
anbasedf
orei
gn
mer
chant
s,whi
chi
nit
ial
l
ymett
hef
undr
equi
rement
soft
radi
ng
communi
ty.Thi
sst
atepr
evai
l
edt
il
lthef
ormat
ionandappear
anceof
EastI
ndi
aCo.
,ont
het
radesceneofI
ndi
a.
Byt
hey
ear1820,
Indi
awasundert
hei
nfl
uenceoff
orei
gn
mer
chantbanker
soper
ati
ngt
hrought
hei
rEastI
ndi
aHouse(
EIH)
,
Ther
ewer
e18suchf
ir
mswi
thmaj
ori
nter
esti
nIndi
aact
ingas
r
epr
esent
ati
vesofEur
opeanMer
chant
s.Asev
eret
urnt
ookpl
acei
n
EI
Hbusi
nesswhi
chf
avour
edI
ndi
abyest
abl
i
shi
ngi
tsownbank,
known
asJoi
ntSt
ockBanks(
JSB)
21andont
heot
herhand,
itcr
ushedt
he
gr
owt
hofi
ndi
genousmer
chantbanker
s.
TheEI
Hfai
l
edt
ofacet
hest
if
fcompet
it
ionposedbyPer
sian
Fi
nanceHouses(
awel
lrecogni
sednamei
nCal
cut
taby1836)andmost
oft
hem di
ver
tedt
hei
ract
ivi
ti
est
oreal
est
atebusi
nessandav
eryf
ew
oft
hem r
emai
nedi
nthef
iel
d.Si
nceEastI
ndi
aMer
chant
shadenough
capi
tal
toi
nvest
,int
hel
ate1860’
s,af
ewoft
hem i
nit
iat
edt
he
est
abl
i
shmentof‘
JSB’
wit
hthei
rowni
nvest
ment
.Despi
tet
his,
opposi
ti
onf
rom EastI
ndi
aCompany
,af
ewnewbankswer
e
est
abl
i
shed,
viz.
,Or
ientBanki
n1845,
Char
ter
edBankofI
ndi
aand
Asi
ain1853,
Char
ter
edMer
cant
il
eBankofI
ndi
ain1857,
etc.
Thesebankswer
econt
rol
l
edbyLondonbasedmer
chantbanker
s
t
hrought
hei
r‘Managi
ngAgent
s’(
MA)
.Theear
li
er‘
AgencyHouses’
wi
thanewr
esponsi
bil
i
tyofmanagi
ngt
heseent
erpr
ises,
successf
ull
y
mett
heneedsofl
ocal
trader
s,af
fect
ingf
urt
hert
hegr
owt
hofmer
chant
banki
ngi
nIndi
a.
The‘
Managi
ngAgencySy
stem’
(MAS)wast
he‘
Gat
eway
’
t
hroughwhi
chLondonbasedmer
chant
sandMBsper
for
medt
he
f
unct
ionssuchasf
inanci
ng,
promot
ing,
proj
ectdev
elopment
,vent
ure
capi
tal
,guar
ant
eei
ngt
hel
oansandadv
ances,
publ
i
cdeposi
ts,
i
nter
locki
ngoff
unds,
etc.
22Theyemer
gedasf
inanci
ali
nter
medi
ari
es
bymanagi
ngcor
por
atei
ssues.Theybecamet
hebackboneofeconomi
c
dev
elopmentbycont
rol
l
ingt
heI
ndi
ani
ndust
ry.Howev
er,
nei
therdi
d
i
tdev
elopar
ightcapi
tal
mar
keti
nIndi
anori
twentf
orunder
wri
ti
ngof
shar
esofI
ndi
anbusi
nesshouses.
TheI
ndi
ancapi
tal
mar
ketunder
wentachangewi
than
amendmentbr
oughti
ntot
heI
ndi
anCompani
esAct1936,
insi
sti
ng
compani
est
odi
scl
oset
he‘
under
wri
ti
ng’
det
ail
sinpr
ospect
us.
2^The
Compani
esAct1956,
fur
therst
reaml
i
nedt
hepr
ocedur
eof‘
Capi
tal
I
ssues’
.Thepost
-i
ndependenceer
awi
tnessedt
heGov
ernmentof
I
ndi
a’
spl
annedat
temptt
oimpr
ovet
heunder
dev
elopedcapi
tal
mar
ket
wi
thi
nst
it
uti
onal
andl
egi
slat
ivesuppor
t.

1.
3Whoar
emer
chantbanker
s?
-
Mer
chantbanksar
epr
ivat
efi
nanci
ali
nst
it
uti
on.

-
Thei
r pr
imar
y sour
ces of i
ncome ar
e PI
PE (
Pri
vat
e
I
nvest
mentI
nPubl
i
cEnt
it
ies)f
inanci
ngsandi
nter
nat
ional
t
rade.

-
Thei
rsecondar
yincomesour
cesar
econsul
ti
ng,Mer
ger
s
&Acqui
sit
ionshel
pandf
inanci
almar
ketspecul
ati
on.

-
Becauset
heydonoti
nvestagai
nstcol
l
ater
al,
theyt
akef
ar
gr
eat
err
iskst
hant
radi
ti
onal
banks.

-
Becauset
heyar
epr
ivat
e,donott
akemoneyf
rom t
he
publ
i
car
eint
ernat
ional
inscope,
theyar
enotr
egul
ated.

-
Any
one consi
der
ing deal
i
ng wi
th any mer
chantbank
shoul
d
i
nvest
igat
ethebankand i
tsmanager
sbef
oreseeki
ng
t
hei
rhel
p.

-
Ther
easont
hatbusi
nessesshoul
d dev
elop awor
king
r
elat
ionshi
pwi
thamer
chantbanki
sthatt
heyhav
emor
e
moneyt
hanv
ent
urecapi
tal
i
sts.Thei
radv
icet
endst
obe
mor
epr
agmat
ict
hanv
ent
urecapi
tal
i
sts.
1.
4Se
rvi
cesof
fer
edbyMe
rch
antBa
nks

Mer
chantBanksoff
ersar
angeoff
inanci
alandconsul
tancyser
vices,
tot
hecust
omer
s,
whi
charerel
atedt
o:

1)Mar
ket
ingandunder
wri
ti
ngoft
henewi
ssue.
2)Mer
gerandacqui
sit
ionr
elat
edser
vices.
3)Adv
isor
yser
vices,
forr
aisi
ngf
unds.
4)Managementofcust
omersecur
it
y.
5)Pr
ojectpr
omot
ionandpr
ojectf
inance.
6)I
nvest
mentbanki
ng
7)Por
tfol
i
oSer
vices
8)I
nsur
anceSer
vices.
Merchantbanki
nghel
psi
nrei
nfor
cingt
heeconomi
cdev
elopmentoft
hecount
ry,
by
act
ingasa

sour
ceoff
undsandi
nfor
mat
iont
othebusi
nessent
it
ies.

1.
5ConceptofMer
chantBank:
Thet
erm‘
mer
chantbank’
isusedi
nav
eryl
oosesense,
asi
ts
usagev
ari
esaccor
dingt
opl
ace,
funct
ionsandr
egul
ati
ons.
Tr
adi
ti
onal
l
y,t
he‘
mer
chant
’tur
ned‘
bank’
wasnamedas‘
mer
chant
bank’
.I
tispr
opert
ocal
lamer
chantbankerpr
imar
il
yamer
chant
r
athert
hanabanker
,thoughhei
sent
rust
edwi
tht
hef
undsofhi
s
cust
omer
s.
Aper
usal
oft
hehi
stor
ical
evi
dencesr
eveal
sthatt
hemer
chant
s
whof
inanceddomest
icandi
nter
nat
ional
trades,
financi
alneedsof
ki
ngs,
pri
ncesandt
hegov
ernment
sgr
adual
l
yident
if
iedt
hemsel
ves
mor
ewi
thbanki
ngact
ivi
ti
essuchasshor
t-
ter
mloans,
bil
l
s
di
scount
ing,
long-
ter
mloans,
for
eignexchange,
etc.
,andemer
ged
t
hemsel
veswi
tht
hel
abel
cal
l
ed‘
mer
chantbanker
’.
C.
J.J.Cl
ayandB.
S.Whebl
e,i
nthei
rbookModer
nMer
chant
Banki
ng,
def
inemer
chantbanki
ngas“
thesocal
l
edmer
chantbanksi
n
Londonar
enowsel
dom mer
chant
sandbynomeansal
way
sbanker
s;t
he
t
it
lei
sof
tenmi
susedasagener
icdescr
ipt
ionoff
ir
mst
hatoper
atei
n
f
inanci
alsect
orwhet
hert
heyper
for
m pur
ebanki
ngser
vicesor
mer
chant
ingser
vicesornot
”.
24Ani
nfer
encet
hatcoul
dbedr
awnf
rom
t
heabov
est
atementi
sthatt
he-
“
Mer
chantBanksar
enei
thermer
chant
snorbanker
s”.
I
tisi
ndeeddi
ff
icul
ttosaypr
eci
sel
yast
owhatconst
it
utes
mer
chantbanki
ng.Theconcept
ual
clar
it
yisdi
ff
icul
ttoassessunl
ess
t
he‘
funct
ional
’aspect
sar
ebr
oughti
ntoi
t.Her
ber
t,J.
A.P.opi
nest
hat
MBas“
Mer
chantBanki
swhatamer
chantbankerdoes”
.25
TheDi
cti
onar
yonBanki
ngTer
msandConcept
s‘A’
to7'
compi
l
edbyLoboPr
abhuexpl
ainst
hat“
Mer
chantBanki
ngi
san
i
nnov
ati
oni
nthef
iel
dofser
vicesr
ender
edbyt
hebanks,
whi
ch
consi
stsofobt
aini
nggov
ernmentconsent
s,pr
ojectf
easi
bil
i
ty,
rai
sing
off
orei
gnexchange,
managi
ngt
hepubl
i
cissues,
cor
por
ate
r
est
ruct
uri
ng,
cor
por
atecounsel
l
ing,
assi
sti
ngi
nwi
deni
ngand
st
rengt
heni
ngt
hecapi
tal
baseofsmal
lscal
eindust
ri
es.
”26
Themoder
nmer
chantbanksr
enderav
ari
etyofser
vices,
whi
ch
cannotbeabr
idgedi
nadef
ini
ti
onast
hei
rser
vicesar
e,i
nfact
,fl
exi
ble
andcl
i
entor
ient
ed.Theconceptt
il
ltodayev
adesacl
eardef
ini
ti
on.
“
Mer
chantBanksar
ebasi
cal
l
ydev
elopmentbanks,
butt
heydonot
l
end.
”27Si
mil
arl
y,“
Mer
chantBanki
ngi
slar
gel
yapr
ojectbanki
ngbut
doesnotl
endagai
nstsecur
it
ies.
28I
nUSA‘
I
nvest
mentBanki
ng'
ter
m
i
susedt
odescr
ibemer
chantbanki
ngf
unct
ionsper
for
medi
nUK.
I
ntheI
ndi
ancont
ext
,mer
chantbanki
ngi
sunder
stood
‘
i
nnov
ati
vef
inanci
alser
vices’
.Ther
egul
ator
ybodyf
ormer
chantbanks
i
nIndi
a,v
iz.
,SEBIi
nit
sRul
esandRegul
ati
onsf
orMer
chantBanker
s
1992def
ines,
“Mer
chantBankermeansanyper
sonwhoi
sengagedi
n
t
hebusi
nessofi
ssuemanagementei
therbymaki
ngar
rangement
r
egar
dingsel
l
ing,
buy
ingorsubscr
ibi
ngt
osecur
it
iesasmanager
,
consul
tant
,adv
iserorr
ender
ingcor
por
ateadv
isor
yser
vicesi
nrel
ati
on
t
osuchi
ssuemanagement
”.
29
Pr
imaf
aci
e,i
tappear
sthat
,thedef
ini
ti
onofSEBIl
aysmor
e
emphasi
sont
hei
ssuemanagementact
ivi
ty,
asi
tcont
inuest
obet
he
‘
cor
efunct
ion’
ofI
ndi
anMBs.I
nconcl
usi
on,
itcanbesai
dthat
,
mer
chantbankmeans-
*Anon-
banki
ngor
gani
sat
ion,
*Acat
aly
sti
cfi
nanci
ali
nter
medi
ary
,
*Aser
viceuni
tpr
ovi
dingt
heent
ir
erangeofadv
isor
y
ser
vices,
and
*Af
eebasedact
ivi
ty.
MBsar
enecessar
il
yfi
nanci
ali
nter
medi
ari
eswhopl
ayav
ital
rol
e
i
ntr
ansf
ormi
ngt
he‘
stor
edweal
th’
ofi
nvest
orsi
nto‘
product
ive
weal
th’
ofcor
por
ates.
Mer
chantBanki
ngi
snotcommer
cial
banki
ng,
thought
het
erms
‘
mer
chant
’and‘
commer
cial
’hav
esi
mil
arconnot
ati
ons.I
nfact
,MBs
dosomecommer
cial
banki
ngandcommer
cial
banksmaydosome
mer
chantbanki
ng.‘
I
nter
medi
ati
on’
iscommonbot
hforcommer
cial
bankandanMBwi
thadi
ff
erencei
ncust
omer
sandt
hecont
extof
ser
vicer
ender
ed.
Ther
eisacl
oser
elat
ionshi
pbet
weent
hemer
chantbanki
ngand
dev
elopmentbanki
ngi
nthepr
ojector
ient
edact
ivi
ti
es,
wher
eint
he
f
ormeract
sasa‘
proj
ectadv
isor
’andt
hel
att
eras‘
proj
ectf
inanci
er'
.
i
nthel
i
ghtoft
heSEBI
’
smodi
fi
edr
ulesandr
egul
ati
onsf
or
mer
chantbanker
s,t
hemer
chantbanki
nghasbeenconf
inedt
o‘ser
vice*
act
ivi
ty.Hence,
thehal
l
mar
kofmoder
nMBsi
sthequal
i
tyoft
hei
r
ser
vices,
obj
ect
ivi
tyandsoundnessoft
hei
radv
icet
ocl
i
ent
s,whi
chi
n
t
urndependsupont
hepr
ofessi
onal
exper
tsbehi
ndi
t.Hence,
MBsl
i
ve
ont
hei
rwi
ts.

1.
6 Funct
ionsofMer
chantbanki
ng:

1:
Rai
singFi
nancef
orCl
i
ent
s:Mer
chantBanki
nghel
psi
tscl
i
ent
stor
aisef
inance
t
hroughi
ssueofshar
es,
debent
ures,
bankl
oans,
etc.I
thel
psi
tscl
i
ent
stor
aise
f
inancef
rom t
hedomest
icandi
nter
nat
ional
mar
ket
.Thi
sfi
nancei
susedf
orst
art
ing
anewbusi
nessorpr
oject
orf
ormoder
nizat
ionorexpansi
onoft
hebusi
ness.

2:
Brokeri
nSt
ockExchange:
Mer
chantbanker
sactasbr
oker
sint
hest
ock
exchange.
Theybuyandsel
lshar
esonbehal
foft
hei
rcl
i
ent
s.Theyconductr
esear
ch
onequi
tyshar
es.Theyal
soadv
iset
hei
rcl
i
ent
saboutwhi
chshar
est
obuy
,whent
o
buy
,howmucht
obuyandwhent
osel
l
.Lar
gebr
oker
s, 
Mut
ual
Funds,
Vent
ure 
capi
tal
 
compani
esand 
Inv
est
ment
 Banksof
fermer
chantbanki
ngser
vices.

3:
Proj
ect
 Management
 :Mer
chantbanker
shel
pthei
rcl
i
ent
sint
hemanyway
s.Fore.
g.
Adv
isi
ngaboutl
ocat
ionofapr
oject
,pr
epar
ingapr
ojectr
epor
t,conduct
ingf
easi
bil
i
ty
st
udi
es,
maki
ngapl
anf
orf
inanci
ngt
hepr
oject
,fi
ndi
ngoutsour
cesoff
inance,
adv
isi
ngabout
concessi
onsandi
ncent
ivesf
rom t
hegov
ernment
.

4:
Adv
iceonExpansi
onandModer
nizat
ion:
Mer
chantbanker
sgi
veadv
icef
or
expansi
onandmoder
nizat
ionoft
hebusi
nessuni
ts.Theygi
veexper
tadv
iceon
mer
ger
sandamal
gamat
ions,
acqui
sit
ionandt
akeov
ers,
div
ersi
fi
cat
ionofbusi
ness,
f
orei
gncol
l
abor
ati
onsandj
oint
-vent
ures,
technol
ogyup-
gradat
ion,
etc.

5:
Managi
ngPubl
i
cIssueofCompani
es:
Mer
chantbankadv
iceandmanaget
he
publ
i
cissueofcompani
es.Theypr
ovi
def
oll
owi
ngser
vices:
a.Adv
iseont
het
imi
ngoft
hepubl
i
cissue.
b.Adv
iseont
hesi
zeandpr
iceoft
hei
ssue.
c.Acti
ngasmanagert
othei
ssue,
andhel
pingi
naccept
ingappl
i
cat
ionsandal
l
otment
ofsecur
it
ies.
d.Hel
pinappoi
nti
ngunder
wri
ter
sandbr
oker
stot
hei
ssue.
e.Li
sti
ngofshar
esont
hest
ockexchange,
etc.
6:
Handl
i
ngGov
ernmentConsentf
orI
ndust
ri
alPr
oject
s:Abusi
nessmanhast
oget
gov
ernmentper
missi
onf
orst
art
ingoft
hepr
oject
.Si
mil
arl
y,acompanyr
equi
res
per
missi
onf
orexpansi
onormoder
nizat
ionact
ivi
ti
es.Fort
his,
manyf
ormal
i
tieshav
e
t
obecompl
eted.Mer
chantbanksdoal
lthi
swor
kfort
hei
rcl
i
ent
s.

7:
Speci
alAssi
stancet
oSmal
lCompani
esandEnt
repr
eneur
s:Mer
chantbanksadv
ise
smal
lcompani
esaboutbusi
nessoppor
tuni
ti
es,
gov
ernmentpol
i
cies,
incent
ivesand
concessi
onsav
ail
abl
e.I
tal
sohel
pst
hem t
otakeadv
ant
ageoft
heseoppor
tuni
ti
es,
concessi
ons,
etc.

8:
Ser
vicest
oPubl
i
cSect
orUni
ts:
Mer
chantbanksof
fermanyser
vicest
opubl
i
c
sect
oruni
tsandpubl
i
cut
il
it
ies.Theyhel
pinr
aisi
ngl
ong-
ter
m capi
tal
,mar
ket
ingof
secur
it
ies,
for
eigncol
l
abor
ati
onsandar
rangi
ngl
ong-
ter
mfi
nancef
rom
t
erm 
l
endi
ng 
i
nst
it
uti
ons.

9:
Rev
ival
ofSi
ckI
ndust
ri
alUni
ts:
Mer
chantbankshel
ptor
evi
ve(
cur
e)si
cki
ndust
ri
al
 uni
ts.I
tnegot
iat
eswi
thdi
ff
erentagenci
esl
i
kebanks,
ter
mlendi
ngi
nst
it
uti
ons,
and
BI
FR(
Boar
dforI
ndust
ri
alandFi
nanci
alReconst
ruct
ion)
.Ital
sopl
ansandexecut
es
t
hef
ull
rev
ival
package.

Por
10: tfol
i
oManagement
 :Amer
chantbankmanagest
hepor
tfol
i
os(
inv
est
ment
s)of
i
tscl
i
ent
s.Thi
smakesi
nvest
ment
ssaf
e,l
i
qui
dandpr
ofi
tabl
efort
hecl
i
ent
.Itof
fer
s
exper
tgui
dancet
oit
scl
i
ent
sfort
aki
ngi
nvest
mentdeci
sions.

11:
Cor
por
ateRest
ruct
uri
ng:
Iti
ncl
udesmer
ger
soracqui
sit
ionsofexi
sti
ngbusi
ness
uni
ts,
sal
eofexi
sti
nguni
tordi
sinv
est
ment
.Thi
srequi
respr
opernegot
iat
ions,
pr
epar
ati
onofdocument
sandcompl
eti
onofl
egal
for
mal
i
ties.Mer
chantbanker
s
of
feral
ltheseser
vicest
othei
rcl
i
ent
s.

12:
MoneyMar
ketOper
ati
on:
Mer
chantbanker
sdeal
wit
handunder
wri
teshor
t-
t
erm 
moneymar
ket
 i
nst
rument
s,suchas:
f
. Gov
ernmentBonds.
g.Cer
ti
fi
cat
eofdeposi
tissuedbybanksandf
inanci
ali
nst
it
uti
ons.
h.Commer
cial
paperi
ssuedbyl
argecor
por
atef
ir
ms.
i
. Tr
easur
ybi
l
lsi
ssuedbyt
heGov
ernment(
Her
einI
ndi
abyRBI
).
j
.
13:
Leasi
ngSer
vices:
Mer
chantbanker
sal
sohel
pinl
easi
ngser
vices.Leasei
sa
cont
ractbet
weent
hel
essorandl
essee,
wher
ebyt
hel
essoral
l
owst
heuseofhi
s
speci
fi
cassetsuchasequi
pmentbyt
hel
esseef
oracer
tai
nper
iod.Thel
essorchar
ges
af
eecal
l
edr
ent
als.

14:
ManagementofI
nter
estandDi
vi
dend:
Mer
chantbanker
shel
pthei
rcl
i
ent
sint
he
managementofi
nter
estondebent
ures/l
oans,
anddi
vi
dendonshar
es.Theyal
so
adv
iset
hei
r
cl
i
entaboutt
het
imi
ng(
int
eri
m /y
ear
ly)andr
ateofdi
vi
dend.

1.
7Pr
e-SEBIPer
iod:

Thehi
stor
ical
evi
dencesi
ndi
cat
ethatmer
chantbanki
ngi
nIndi
a
wasundert
hegr
eati
nfl
uenceofEur
opeant
radel
i
nks.TheI
ndi
an
st
ockbr
oki
ngf
ir
mst
radi
ti
onal
l
yper
for
medaf
ewmer
chantbanki
ng
act
ivi
ti
esi
nthei
rownf
ashi
on.TheMer
chantBanki
ngDi
vi
sions
(
MBDs)
,est
abl
i
shedbyt
hef
orei
gnbanks,
viz.
,Gr
indl
aysBankLt
d.
andCi
ti
bankLt
d.under
tookf
unct
ionssuchaspr
e-i
nvest
mentst
udi
es,
pr
ojectf
inance,
mar
ketr
esear
ch,
syst
emsdesi
gn,
managementaudi
t,
pr
oduct
ionmanagementandoper
ati
onsr
esear
ch,
expor
tmar
ket
sand
f
orei
gncol
l
abor
ati
ons,
recr
uit
mentandor
gani
sat
ional
dev
elopment
.30
Wi
tht
hepassageoft
ime,
funct
ional
spect
rum oft
hesebankshas
under
goneachange.
Thepubl
i
csect
orbanksest
abl
i
shedt
hei
rMBDsf
rom 1972onwar
ds.
Undert
her
egi
meofCont
rol
l
erofCapi
tal
Issues,
these
di
vi
sionsspeci
ali
sedt
hemsel
vesi
nar
eassuchaspr
ojectf
inance,
adv
ice,
proj
ectappr
aisal
,capi
tal
str
uct
uri
ng,
bil
l
sdi
scount
ing,
issue
management
,under
wri
ti
ng,
rel
i
eft
osi
cki
ndust
ri
aluni
ts,
etc.The
amendmentt
hatwasbr
oughtt
oBanki
ngRegul
ati
onActi
n1984
per
mit
tedt
hesubsi
diar
iest
ounder
takel
easi
ngandhi
re-
pur
chase
act
ivi
ti
esal
so.

1.
8Post
-SEBIPer
iod:
Thef
unct
ional
spect
rum ofMBsunder
wentaseachangewi
tht
he
est
abl
i
shmentofSEBIi
n1988andt
heannouncementofRul
esand
Regul
ati
onsf
orMBsi
n1992.
Theaut
hor
isedact
ivi
ti
esofmer
chantbanker
sdur
ingt
hisper
iod
hav
ebeen:
*Cor
por
ateI
ssueManagement
,
*Cor
por
ateAdv
iceSer
vicesr
elat
ingt
oissue,
*Under
wri
ti
ng,
*Por
tfol
i
oManagement
,and
*Manager
,Consul
tant
s/Adv
isori
nthei
ssue.
I
nIndi
a,t
hePubl
i
cIssueManagement(
PIM)ofcor
por
atei
ssues
cont
inuest
obet
hecor
ecompet
encyact
ivi
tyoft
her
egi
ster
edmer
chant
banker
sint
hei
rvar
iouscapaci
ti
esasl
eadmanager
s,adv
iser
s,et
c.
TheSEBImodi
fi
edi
tsr
egul
ati
onson7t
hDecember
,1997whi
ch
wer
eter
medas‘
mil
e-st
one’
int
hehi
stor
yof‘
I
ndi
anMer
chant
Banki
ng’
.TheSEBIcat
egor
isedact
ivi
ti
esi
ntof
undbasedandf
ee
basedandmadeMBst
oconcent
rat
eonl
yont
hel
att
ert
hanont
he
f
ormeract
ivi
ti
es.Wi
tht
hesemodi
fi
cat
ions,
themer
chantbanki
ng
act
ivi
ti
esr
ecei
vedapr
ofessi
onal
touch.I
nthel
i
ghtoft
his
met
amor
phosi
sint
hecapi
tal
mar
ketandf
inanci
alser
vices,
the
mer
chantbanki
ngsect
oradopt
edqui
ckl
ybyi
ncor
por
ati
ngt
hemoder
n
ser
vices.

1.
9Or
gani
sat
ionofMer
chantbanki
ng:
I
nIndi
a,t
hemer
chantbanki
ngact
ivi
ti
eswer
ecar
ri
edoni
nan
unor
gani
sedmannerdur
ingt
hecol
oni
alper
iod.TheMAS,
ini
tsr
eal
sense,
wast
heuni
queef
for
tmadebyf
orei
gnmer
chant
stocar
ryon
mer
chantbanki
ngact
ivi
ti
esi
nanor
gani
sedway
.TheMASunder
took
t
hebasi
cissuemanagement
.TheGov
ernmentofI
ndi
a’
sef
for
ttobui
l
d
anor
gani
sedcapi
tal
mar
ket
,ledt
otheest
abl
i
shmentofspeci
ali
sed
f
inanci
ali
nst
it
uti
ons.Thesef
inanci
ali
nst
it
uti
onsal
ongwi
tht
hei
r
dev
elopment
alact
ivi
ti
esper
for
medaf
ewofmer
chantbanki
ngr
elat
ed
act
ivi
ti
es.
Thef
orei
gnbanksar
ethef
orer
unner
sofmer
chantbanki
ng
act
ivi
ti
esi
nIndi
a.TheGr
indl
aysBankwast
hef
ir
stt
oini
ti
ate
mer
chantbanki
ngact
ivi
ti
esbyest
abl
i
shi
ngi
tsMBD.Thi
swas
f
oll
owedbyt
hecommer
cial
banksandal
lIndi
afi
nanci
ali
nst
it
uti
ons
whi
chest
abl
i
shedt
hei
rownMBDsf
rom 1972onwar
ds.Thi
sdi
vi
sional
act
ivi
tyr
emai
nedast
hemostv
iabl
efor
m ofmer
chantbanki
ng
or
gani
sat
ioni
nIndi
ati
l
lthei
ncor
por
ati
onofsubsi
diar
iesby
commer
cial
banks.TheSBICapi
tal
Mar
ket
sLt
d.,
wast
hef
ir
stofi
ts
ki
ndt
obeest
abl
i
shedbyt
hepubl
i
csect
orbanksi
n1986.Ot
herbanks
f
oll
owedsui
tbyest
abl
i
shi
ngt
hei
rownsubsi
diar
iest
omeett
he
i
ncr
easeddemandoft
hespeci
ali
sedmer
chantbanki
ngser
vices.
Thepr
ivat
esect
orMBscompr
iseofst
ockbr
oker
s,par
tner
shi
p
f
ir
ms,
pri
vat
eli
mit
edcompani
es,
etc.Hi
stor
ical
l
y,manyoft
hese
or
gani
sat
ionswer
efoundeddur
ingt
hecol
oni
alper
iodwor
kingunder
t
hepr
essur
eofMAS.Thest
ockbr
oker
sar
ethel
i
censedoper
ator
sin
t
her
ecogni
sedst
ockexchange.
1.
10Sour
ce:
SEBI-
Annual
Repor
t.
Theseor
gani
sat
ionsmayadoptanyt
ypeof‘
organi
sat
ional
pat
ter
n’t
osui
tthei
rrequi
rement
s.Ther
ear
edi
ff
erentpat
ter
ns,
viz
.,
f
unct
ional
ori
ent
ed,
exper
tor
ient
ed,
combi
nat
ionoff
unct
ional
and
exper
ts,
manageror
ient
ed,
propr
iet
aryor
ient
ed,
etc.
,whi
char
e
adopt
edbymostoft
hemer
chantbanki
ngi
nst
it
uti
onsf
ort
hei
r
or
gani
sat
ions.Thepat
ter
n,t
husadopt
ed,
dependsupont
henat
ureof
ser
vicesr
ender
edbyt
heMBs.
I
nIndi
a,t
hemanageror
ient
edpat
ter
nishi
ghl
ypr
efer
redi
n
whi
chmanagerheadst
heor
gani
sat
ionandl
ooksaf
tert
heent
ir
egamut
ofact
ivi
ti
eswi
tht
hehel
pofassi
stantmanager
s.Butt
hemer
chant
banki
ngsubsi
diar
ieshav
egonef
oracombi
nat
ionofexper
tand
f
unct
ional
ori
ent
edf
orm ofor
gani
sat
ion.Theor
gani
sat
ional
pat
ter
n
canbet
akenast
hecr
it
eri
atoev
aluat
eanor
gani
sat
ion.
1.
11Gr
owt
hofMer
chantbanksi
nIndi
a:
Si
ncet
heest
abl
i
shmentofGr
indl
aysBank'
sdi
vi
sionofMBi
n
I
ndi
a,t
heact
ivi
tyhasseent
het
remendousgr
owt
h.I
nthef
oll
owi
ng
pages,
thegr
owt
hofMBact
ivi
ti
esi
sanal
ysedwi
tht
hehel
poft
he
f
oll
owi
ngcr
it
eri
a:
*NumberofMBsr
egi
ster
ed,
*Numberofi
ssuesmanaged,
*Amountofi
ssueshandl
ed,
*Par
ti
cipat
ionofv
ari
ousagenci
es,
*Var
iet
yofi
nst
rument
sissued,
*Numberofi
nit
ial
publ
i
cof
fer
s,et
c

1.
12NumberofMer
chantbanksRegi
ster
ed:
TheGOI
'
sef
for
ttor
enewt
heI
ndi
ancapi
tal
mar
ketandmar
ket
i
nter
medi
ari
esar
eev
identt
hroughoutt
hehi
stor
y.Ar
emar
kabl
e
dev
elopmentwast
heconst
it
uti
onofSecur
it
iesExchangeBoar
dofI
ndi
a
(
SEBI
)in1988,
asanapexBoar
dtopr
omot
etheor
der
lyandheal
thy
gr
owt
hofsecur
it
iesmar
ketandabol
i
tionoft
heof
fi
ceoft
heCont
rol
l
er
ofCapi
tal
Issues.
TheSEBIwasest
abl
i
shedont
hel
i
nesof‘
Secur
it
iesand
ExchangeCommi
ssi
on’
ofUSAand‘
Secur
it
iesandI
nvest
mentBoar
d’
ofUK.
TheSEBIpr
omul
gat
eddi
sti
nctr
ulesonmer
chantbanki
ng
act
ivi
ti
esi
nthey
ear1992.Ev
eryi
ndi
vi
dual
ori
nst
it
uti
oni
ntendi
ngt
o
under
takemer
chantbanki
ngact
ivi
ti
eshast
oregi
sterwi
tht
heSEBI
.It
i
sdoneaccor
dingt
ocat
egor
isat
ionpr
escr
ibedbyt
heSEBI
.Tabl
e2.
2
gi
vesi
nfor
mat
ionr
egar
dingnumberofr
egi
ster
edMBsi
nIndi
asi
nce
t
heest
abl
i
shmentoft
heSEBI
.gi
vesi
nfor
mat
ionr
egar
dingnumberof
r
egi
ster
edMBsi
nIndi
asi
ncet
heest
abl
i
shmentoft
heSEBI
.
Aper
usal
ofTabl
e1.1.
1rev
eal
sthat-
*Ther
eisacont
inuousi
ncr
easei
nal
lcat
egor
iesofMBsupt
o
1997.Thi
ssur
gecoul
dbeat
tri
but
edt
otheabol
i
tionofCCI
of
fi
ceandi
ntr
oduct
ionof‘
Free-
Pri
cing’
ofi
ssues

TABLE-1.
1.1
NumberofRegi
ster
edMBsi
nIndi
a
Year
s 1 I
III
IIV Tot
al

1992-
93 127 09 08 29 173
1993-
94 211 28 35 148422

1994-
95 NA NA NA NA 790
1995-
96 404 72 158 364 998

1996-
97 440 107 172 444 1163
1997-
98 343 82 91 286 802

1998-
99 243.
31 14 127 415
1999-
2000174 Ni
lNi
l12 186

Sour
ce:
SEBI-
Annual
Repor
ts.

*Af
ter1997,
thet
rendhasr
ever
sedandnumberofMBsr
egi
ster
ed
decl
i
nedf
rom 1,
163i
n1996-
97t
o186i
n1999-
2000.Thi
s
decl
i
necanbeat
tri
but
edcompl
etel
ytoi
ncr
easedcompet
it
ion
amongMBs,
sluggi
shcondi
ti
onsi
ncapi
tal
mar
ket
s,r
educed
numberofi
ssues,
incr
easedr
eli
anceonpr
ivat
epl
acementr
out
e
bycor
por
atehouses,
etc.

Af
urt
heranal
ysi
sofTabl
e1.
1.1showst
hatonl
ycat
egor
y-1MBs
hav
eremai
nedi
nthemar
ketwhi
l
ether
estoft
hecat
egor
ieshav
e
al
mostceasedt
oexi
st.Outof186MBsr
egi
ster
ed,
cat
egor
y-Ihas174
MBswhi
l
ether
estbel
ongt
ocat
egor
y-I
VMBsdoi
ngonl
yadv
isor
y
andconsul
tat
ionser
vices.Fur
ther
,thecat
egor
y-IMBshav
egr
ownand
f
all
enwi
tht
heov
eral
ltr
endofMBsi
nIndi
a.

1.
13NumberofPubl
i
cIssuesHandl
ed:
Thegr
owt
hofmer
chantbanki
ngi
srel
atedwi
thanumberof
dev
elopment
sint
heI
ndi
aneconomyi
ngener
alandcapi
tal
mar
keti
n
par
ti
cul
ar.Theshi
ftf
rom t
heer
aofadmi
nist
eredpr
icest
omar
ket
det
ermi
nedpr
ices,
der
egul
ati
onofi
nter
estr
atesandt
hepr
ocessof
l
i
ber
ali
sat
ion,
global
i
zat
ionandpr
ivat
isat
ionhav
ebr
oughtaseachange
i
nthepat
ter
noff
inanci
ngadopt
edbyt
hecor
por
ateent
it
ies.The
di
sint
ermedi
ati
onpr
ocesshasseti
nIndi
aandt
hecor
por
atewor
ldi
s
i
ncl
i
nedmor
etor
aisef
undsdi
rect
lyf
rom sav
erst
hant
het
radi
ti
onal
t
imet
est
edr
out
eofr
aisi
ngt
hroughf
inanci
ali
nst
it
uti
ons.Thi
schange
hast
remendousi
mpactont
hegr
owt
hofMBsi
nIndi
aint
ermsof
numberofi
ssueshandl
edandav
erageamountofi
ssueshandl
e.

1.
14I
POsManagement:
TheGov
ernmentofI
ndi
a’
sef
for
ttoi
mpr
ovet
hecapi
tal
mar
ket
oper
ati
onsandpr
ocedur
est
orai
set
hepubl
i
cfundhassuppor
tedt
he
mor
aleofnewent
repr
eneur
s.Thenewl
i
ber
ali
sedi
ndust
ri
all
i
censi
ng
pol
i
cyhasi
ncr
easi
ngl
yrecogni
sedt
heneedofsuppor
ti
ngt
echnocr
ats
t
omat
eri
ali
set
hei
rideas.TheMBscanassi
stt
heent
repr
eneur
sint
his
r
espectbyf
ormul
ati
ngandf
inanci
ngt
hebusi
nesspl
ans.Thei
rfunct
ion
i
smai
nlyt
oactassponsor
sandunder
wri
ter
s,r
athert
hanasf
inanci
ers.
Theef
fi
ciencywi
thwhi
chMBsper
for
m candeci
det
hesuccessofnew
ent
repr
eneur
s.Wi
thnopastt
rackr
ecor
d,t
hedi
rectsal
eofsecur
it
ies
woul
dbeadi
ff
icul
ttask.Fur
ther
,lackofcapi
tal
woul
djeopar
diset
he
v
eryi
deaofbei
ngcommer
cial
i
sed.Thel
eadmanager
swi
thpr
oper
pl
aci
ngandmanagementofi
ssuecanensur
ethei
nit
ial
successoft
he
ent
erpr
ise.
Thesoci
alr
oleofMBsdemandst
hatt
heI
POsmustbemanaged
successf
ull
y.I
nthesuccessf
ulmanagementofI
POsl
i
es,
ther
evi
val
andpr
ospect
sofcapi
tal
mar
ket
singener
alandMBsper
for
mancei
n
par
ti
cul
ar.
Wi
tht
hisendi
nvi
ew,
anat
tempthasbeenmadet
oanal
ysehow
f
arMBshav
esuccessf
ull
ymanagedI
POsoft
henewent
repr
eneur
s.
y
ear
sIPOsar
etheonl
ythi
ngswhi
char
eoccur
ri
ng.I
tal
soi
ndi
cat
es
t
hatsl
uggi
shnessofcapi
tal
mar
keti
spar
tl
yexpl
ainabl
efort
hel
ackof
i
ssuesf
rom exi
sti
ngcompani
esi
npr
imar
ymar
ket
.Howev
er,
from
ent
repr
eneur
shi
pdev
elopmentpoi
ntofv
iew,
thei
ncr
easedmanagement
of I
POs speaks hi
ghl
y of t
he r
ole of MBs.
1.
15Adv
ant
agesofmer
chantbanki
ng

1.Youwi
l
lrecei
vecor
por
at ng.
ecounsel
i

Mer
chantbankswi
l
lusual
l
ypr
ovi
decor
por
atecounsel
i
ngaspar
toft
hei
rser
vice

packaget
ocor
por
ateuni
ts.Thi
sisdonet
oev
aluat
etheov
eral
lfi
nanci
alper
for
manceof

acompanyt
hati
sseeki
ngt
omakeaspl
ashi
nani
nter
nat
ional
mar
ket
.These

ev
aluat
ionscanhel
pacompanyget
feedbackt
hati
shonestandcr
it
ical
tot
hei
rsuccess,

hel
pingt
obui
l
dabet
terr
eput
ati
onamongsti
nvest
orsandst
akehol
der
s.Suggest
ions,

opi
nions,
andev
endet
ail
edr
epor
tsmayal
lbepar
toft
hecounsel
i
ngpr
ocess.
 2.Youwi
l
lrecei
vehonestpr
oj eedback.
ectf

Mer
chantbankswi
l
lwor
kwi
thy
ourcompanyt
odev
elopani
deaf
orapr
ojectorr
evi
ew

t
hepr
ojectpr
ofi
l
eyou’
veal
readycr
eat
ed.You’
l
lbeabl
etodet
ermi
neanest
imat
edcost

f
ort
hepr
oject
,lookf
orf
inanci
ngsol
uti
ons,
andbegi
ntocr
eat
etheact
ionst
epst
hatar
e

neededt
ogett
hepr
ojectof
fthegr
ound.Somemer
chantbankswi
l
lev
enpr
ovi
dehel
pin

obt
aini
nggov
ernmentconsentt
ogett
hepr
ojectst
art
ed.You’
regoi
ngt
oknowi
fthe

i
deay
ouhav
eisv
iabl
eatt
heendoft
hispr
ocess.

3.Youmaybeabl
etor
est
ruct
urey
ourcapi
t .
al

Amer
chantbanki
sabl
etoof
ferr
elev
antadv
icet
ocompani
esaboutmer
ger
sand

acqui
sit
ionsi
nthei
rindust
ry.Theywi
l
lexami
net
hecur
rentcapi
tal
str
uct
ureoft
he

companyanddeci
dewhatt
hecur
rentext
entofcapi
tal
i
zat
ionhappenst
obe.Al
ter
nat
ive

capi
tal
str
uct
uresmayber
ecommendedt
oensur
eregul
ator
yandl
egal
compl
i
ancei
n

f
orei
gnmar
ket
s.Di
si
nvest
menti
ssuesmayal
sobeexami
nedher
etoensur
ethatany

pr
oposedpr
ojectori
nvest
menthast
hebestchancef
orsuccess.

4.Your
ecei
vepor
tfol
i .
omanagement

Ser
vicesar
eof
fer
edbymer
chantbankst
oinv
est
orsandcompani
eswhi
chi
ssue

secur
it
ies.Mostcl
i
ent
sofamer
chantbankar
einst
it
uti
onal
inv
est
ors,
looki
ngt
ocr
eat
e

asecur
epor
tfol
i
othatwi
l
lhel
ptobui
l
dthei
rweal
thov
ert
ime.You’
l
lrecei
vet
he
necessar
yser
vicest
hatar
erequi
redt
opr
ovi
dey
ouwi
thani
nvest
mentmi
xthatf
it
syour

needs,
consi
der
inganyt
axbr
acketi
ssues,
obj
ect
s,andt
heov
eral
lret
urny
ou’
rel
ooki
ng

t
oachi
eve.Mer
chantbankswi
l
lal
sobuyandsel
lsecur
it
iesf
ort
hei
rcl
i
ent
s.Someev
en

manageof
f-
shar
efundsandmut
ual
fundst
oo.

5.You’
l
lrecei
vei
ssuemanagementassi
stance.

Somemer
chantbanksactasasponsorf
orbondi
ssuesandot
herf
ormsoff
inanci
ng
thata

businessmayr
equi
re.Theycoor
dinat
ewi
thot
herbr
oker
sandbanker
stopubl
i
cizet
he
i
ssues,

deci
dewhet
hert
aki
ngi
tpubl
i
cist
her
ightcour
seofact
iont
otake,
andwor
ktosel
ect

under
wri
ter
sandagr
eement
swhi
chcr
eat
ear
elat
ionshi
pthati
smut
ual
l
ybenef
ici
alf
or

every
one.Thesebankswi
l
lal
soadv
iseont
het
ypeofdebent
urest
hatar
etobei
ssued,
suchas

bei
ngr
edeemabl
eornon-
redeemabl
e,conv
ert
ibl
e,ori
ftheyshoul
dbel
i
nkedwi
thequi
ty.

6.Youcanr
ecei
vei
mmedi
atedebtf
undi
ngt
hr chantbank.
oughamer

Alt
houghamer
chantbankof
tenf
ocusesonweal
thdev
elopmentov
ert
ime,
busi
nesses
canalso

appl
yforandr
ecei
vet
radi
ti
onal
lendi
ngpr
oduct
s.Youcanuseshor
t-
ter
m andl
ong-
t
ermloans

fr
om thebankt
orai
set
hecapi
tal
requi
redf
oraspeci
fi
cpr
oject
.Theappl
i
cat
ion
pr
ocessfor
lendi
ngwi
l
lusual
l
yrequi
reabusi
nesspl
ant
hatl
ooksatt
otal
cost
s,expect
edr
etur
ns,
andthe

ov
eral
lcr
edi
tpr
ofi
l
eoft
hecompanyt
odet
ermi
nef
inal
eli
gibi
l
ity
.

7.Your
ecei
vel
easef
inanci
ngser
vices.

Merchantbankspr
ovi
decompani
eswi
thf
inancef
aci
l
iti
esandpr
ovi
del
easi
ngt
othei
r
cust
omer s.

Thi
sgivesy
out
heabi
l
ityt
ohav
etheuseandcont
rol
overcer
tai
nasset
syoumay
r
equi
re

wit
houttheneedt
otakef
ull
owner
shi
pov
ert
hem.I
fyoudet
ermi
net
hatowni
ngi
s
bet
tert
han

leasi
ng,t
henthebankscanhel
pyout
ransi
ti
ony
ourl
easi
ngagr
eementi
ntoan
ownershi
pone.

They
’l
lal
sohel
pyoudev
elopopt
ionsf
orl
easer
enewal
sfory
ourpr
oject
saswel
l
.

8.Youar
eabl
etopr
otecty
ourI
P.

Wheny ouworkwi
thamer
chantbank,
you’
rewor
kingwi
thapar
tnert
hatcr
eat
es
successfor

themsel
vesbyhel
pingy
out
obesuccessf
ul.Thatmeanst
heyar
einv
est
edi
nmaki
ng
surey
our

i
ntel
lect
ualpr
oper
ty,
pat
ent
s,andot
hert
angi
bleasset
sar
epr
oper
lypr
otect
ed.Any
i
nfor
mation

yousuppl
ydur
ingt
hemer
chantbanki
ngpr
ocessi
skeptconf
ident
ial
.Al
thoughy
ou
mustpur
sue

for
mal
it
ies,suchasapr
ospect
us,
you’
l
lst
il
lhav
easour
ceoff
undi
ngt
hatdoesn’
t
compr
omi se
t
hesecur
it
yofwhaty
ouv
alue.

9.Youcanhav
ecur
rencyexchangesmanagedf
ory
ourcompany
.

Mer
chantbankspr
ovi
def
undsbyi
ssui
ngal
ett
erofcr
edi
t.I
fyou’
rel
ooki
ngt
oexpand

i
nter
nat
ional
l
y,t
hent
hel
ett
erofcr
edi
twoul
dber
ecei
vedbyt
hesel
l
ersaspay
mentf
or
t
he

purchasey
ouar
emaki
ng.Theny
ou’
l
lwal
kthr
ought
hel
egal
issuesr
equi
redt
oconduct
busi
ness

int
henewmar
ket
.Amer
chantbankwi
l
lal
sohel
pyout
omanagecur
rencyexchanges
asf
und

ar
etr
ansf
err
edoutofi
nter
nat
ional
mar
ket
s.

10.
15Di
sadv
ant
agesofmer
chantbanki
ng

1.Youraccountwi
l
lbemor
eexpensi
vet
hanat
radi
ti
onal
bankaccount
.

Merchantbankst
endt
ochar
gehi
gherf
eesf
ort
hei
rser
vicescompar
edt
otr
adi
ti
onal
banki
ng

ser
vicesandpr
oduct
s.Youmayber
equi
redt
ohav
eami
nimum networ
tht
owor
kwi
th
t
hebank,

hav
easpeci
fi
cpor
tfol
i
oal
readydev
eloped,
orhav
east
rongcr
edi
tpr
ofi
l
ewi
thahi
stor
y
of

projectdev
elopmentt
oqual
i
fyf
ort
hebank’
sser
vices.Al
thoughy
oumayr
ecei
vet
he
i
nit
ial

consul
tat
ionorev
aluat
ionf
orf
ree,
ther
eisnoguar
ant
eey
ourcompanywi
l
lbeaccept
ed.

2.Youhav
esi
zeconsi
der
ati
onswhi
chmustbemet
.

ThankstotheInt
ernet
,anyst
art
uporSMBhast
hepot
ent
ial
toent
eri
ntoan
i
nternat
ional
market.

Justbecausey
ouar
epr
esentsomewher
eint
ernat
ional
l
ydoesnotmeant
haty
ou’
re
goi
ngto

qual
i
fyfort
heser
vicesamer
chantbankpr
ovi
des.Ther
ear
eusual
l
ysi
zeconsi
der
ati
ons
t
hatmust

bemet
,whi
chmayi
ncl
uder
evenuemi
nimums,
busi
nessst
ruct
ure,
andmor
e.I
fyou’
re

str
uctur
edasapar
tner
shi
porsol
epr
opr
iet
or,
you’
rel
essl
i
kel
ytogett
hechancet
o
workwit
ha

mer
chantbankonapr
ojectunl
essy
ou’
ret
ryi
ngt
oexpandt
hepor
tfol
i
ooft
hecompany
.

3.Youwi
l
lal
way
shav
ether
iskofami
xedchancef
orsuccess.

Merchantbanksmi
ghtdeci
det
owor
kwi
thy
ouonaf
inanci
ngpackage,
butt
hati
sonl
y
onestep

towardevent
ualsuccess.Asset
sar
eof
tenr
equi
redf
ort
heunder
wri
ti
ngpr
ocess,
especi
all
ywhen

abusinessi
snewt
oani
ndust
ry,
fir
stget
ti
ngst
art
ed,
orent
eri
ngi
ntot
hei
rfi
rst
i
nter
nati
onal

mar
ket
.Thoseasset
smi
ghtneedt
ocomef
rom t
heper
sonal
asset
soft
heC-
Sui
tet
o
secur
esome

fi
nanci
ng.Mer
chantbanksar
eli
keal
lot
herbanks–t
heyl
i
ket
oinv
estwhent
heyknow
t
hereis

goodchancef
orar
etur
n.

4.You’
renotgoi
ngt
orecei
vest
art
-upf
undi
ng.

Mostmerchantbanksar
eint
hebusi
nessofhel
pingy
ourcompanyscal
eupwar
d.The
f
ocusis

usual
l
yonint
ernat
ional
mar
ket
s,buti
ntheUni
tedSt
ates,
mov
ingi
ntoanewst
ateor
communi
ty

mayqual
i
fyf
orbanki
ngsuppor
t.Whaty
ou’
renotgoi
ngt
orecei
vei
sst
art
-upf
undi
ng.
Your

businessmusthav
eanest
abl
i
shedr
ecor
dofsomesuccesst
otakeadv
ant
ageoft
he
ser
vices

whichar
ebei
ngof
fer
ed.And,
ify
ouar
eappr
ovedandy
ourbusi
nessi
sst
il
lyoung,
you’
l
l
hav
e

st
ri
ctr
epay
mentgui
del
i
nesandsmal
l
eramount
sof
fer
edf
orf
undi
ng.

5.Youhav
enocont
rol
overy
ouri
nter
estr
atesorr
etur
ns.

Thi
sissuemaybet
hebi
ggestdi
sadv
ant
ageofwor
kingwi
thamer
chantbank.Mostwi
l
l
not

prov
ideaguar
ant
eedr
etur
nify
ouhav
ethem managi
ngy
ouri
nvest
mentpor
tfol
i
o.I
f
y
outakeon

alendi
ngpr
oductt
oexpandt
hephy
sical
asset
sofy
ourcompany
,theny
ouhav
eli
tt
le
cont
rol
overt
heint
erestr
atesassi
gnedt
othel
endi
ngpr
oduct
.Yourpr
ofi
l
eisbasedont
he
per
cei
vedand

realr
iskst
hatt
hebankf
eel
sar
epr
esentwhenwor
kingwi
thy
ou.I
fyourcompanyi
s
seenas

high-r
isk,
eveni
fitt
urnsoutt
obeal
ow-
ri
skv
ent
ure,
you’
regoi
ngt
opaymor
efort
he
serv
ices

r
ecei
ved.

6.Youmaynotr
ecei
vecompl
etef
undi
ng.

Onewaythatmer
chantbankshel
ptospr
eadr
iskl
evel
sar
oundi
stopr
ovi
dei
ncompl
ete
fundi
ng

forleases,
expansi
ons,
andot
heri
nvest
mentneeds.Thatf
orcesy
ourcompanyt
owor
k
wit
h

mult
ipl
emerchantbanksi
nst
eadofone.Theybenef
itbecauseeachnewcont
ri
but
or
l
owerst
hei
r

overal
lri
sk.You’
rest
uckmaki
ngmul
ti
plepay
ment
sformul
ti
plepr
oduct
sorpay
ing
dupl
i
cate

f
eesf
orsi
mil
arser
vicesunt
ily
ourr
iskpr
ofi
l
ecanbel
ower
ed.

7.Youmaynothav
eaccesst
oev
erypot
ent
ial
product
.

Tradi
ti
onal
banksmaybewi
l
li
ngt
olendmoneyt
oyouwhenamer
chantbankdoesnot
.
Thati
s

becauset
radi
ti
onal
bankst
endt
oof
ferav
ari
etyofpr
oduct
swhi
chl
ower
sthei
rov
eral
l
r
isk

pr
ofi
l
eint
ernal
l
y,whi
chi
sapr
act
icet
hatnotev
erymer
chantbankmayf
oll
ow.I
fyou’
re
thi
nkingaboutcr
eat
ingCDl
adder
sandot
herconser
vat
ivei
nvest
ment
s,i
tmaybe
wort
hwhileto

seewhatyourl
ocal
bankorcr
edi
tuni
oncoul
dof
fer
,ev
eni
fyourbusi
nessi
scl
assi
fi
ed
asal
arge

cor
por
ati
on.

8.Youwi
l
lbei
nvest
igat
edaspar
toft
hef
undi
ngpr
ocess.

I
tmaybemar
ket
edasaf
reeev
aluat
ion,
butwhatamer
chantbanki
sreal
l
ydoi
ngi
sa
det
ail
ed

investi
gat
ionofal
lyourbusi
nessaf
fai
rs.Theywi
l
llookaty
ourf
inanci
alst
ruct
ure,
evaluat
ethe

secur
it
yofyourasset
s,andev
enj
udgey
ourper
sonal
sur
eti
es.I
fsomet
hingi
sfoundt
o
beout
-of-

orderdur
ingt
hei
rinv
est
igat
ion,
itcoul
dimpactt
hecr
edi
tpr
ofi
l
eoft
hecompany
.Att
he
very

least
,thet
ermsandcondi
ti
onsr
equest
edofy
oumaybenear
lyi
mpossi
blet
omeet
,
whichmeans

ei
therchangi
ngt
hest
ruct
ureofy
ourbusi
nessorl
ooki
ngf
orf
undi
ngel
sewher
e.

9.Youdonothav
eaguar
ant
eeofar
enewal
orext
ensi
on.

Whenf undsaremadeav
ail
abl
ethr
oughmer
chantbanki
ng,
theyar
egener
all
y
accessi
blefora

shortti
meper
iodonl
y.Recei
vi
nganext
ensi
onoft
heagr
eement
,orar
enewal
,maybe
uncer
tai
n

–i fnoti
mpossi
ble.Long-
ter
mfundi
ngi
ssomet
imesav
ail
abl
ethr
oughmer
chant
banking,
but
mostoft hepr
oject
sthatar
eappr
ovedar
ebasedona5-
yearper
iodorl
ess.Theonl
y
except
ionto

thi
srul
einv
olv
est
hosewhousemer
chantbanksf
ori
nvest
mentpur
posesi
nst
eadof
f
unding

pur
poses.

10.Youmayhav
eaddedr
epor
ti
ngr
equi
rement
stomeet
.

Amerchantbankwi
l
lhel
pyoumakesur
ethaty
ou’
reawar
eofy
ourr
egul
ator
y
r
equi
rements.

Whattheywi
l
lnotdoi
scr
eat
ether
epor
tsf
ory
ou.Wheny
oubegi
nwor
kingwi
tha
mer
chant

bank,
ther
emaybeaneedf
oraddeddi
scl
osur
etoanyst
akehol
der
sthatar
eassoci
ated
wi
thyour

business.Ther
ear
eal
mostal
way
saddi
ti
onal
cost
sassoci
atedwi
thaddedr
epor
ti
ng
and

compl
i
ancer
equi
rement
s.

Mer
chantBankv
sInv
est
mentBank–SameorDi
ff
erent
?

Often,
amer chantbanki
scal
l
edani
nvest
mentbank.
 Butt
hey
’renott
hesame,
especi
all
ythe
scopeofwor
kforbot
hoft
hesebanksar
equi
tedi
ff
erent
.

Themaindi
ff
erencebet
weenamer
chantandani
nvest
mentbanki
sthe 
cli
ent
sthey
ser
ve.

A merchantbankwor
kswi
thcl
i
ent
sthatar
enotbi
genought
ogof
or 
i
nit
ialpubl
i
c
of
fer
ing

(I
PO)
 butar
epr
ivat
elyhel
d.That
’swhyt
ohel
pst
hem i
nuni
queway
stor
aisecapi
tal
.
 As
f
or

example,
wecant
alkaboutpr
ivat
epl
acement
s.Si
ncepr
ivat
epl
acement
sdon’
trequi
re
a 
pri
vat
ely

held company 
to di
scl
ose as pert
he Secur
it
yExchange & Commi
ssi
on (
SEC)
,it
becomeseasier

forthepri
vat
elyhel
dcompani
es.Ont
heot
herhand,ani
nvest
mentbankwor
kswi
th
hugecl
ient
s

thathavethef
undsl
argeenought
ogof
orI
POandt
heyar
elar
geenought
opr
ovi
de
t
ime,eff
ort
,

moneyt
orai
set
hecapi
talt
hrought
het
radi
ti
onalmeans.Pl
us,
an 
i
nvest
mentbankal
so
hel
ps

compani
esi
nmer
ger
s&acqui
sit
ions 
andal
sopr
ovi
desi
nvest
mentr
esear
cht
othe
cl
i
ent
s.

I
tmayof t
enseem t
hatani
nvest
mentbanki
sthesamebecauset
heybot
hser
vehi
gh
net
-wor
th

indiv
idualsandt
heybot
har
enotopent
othegener
alpubl
i
c.Butast
hei
rser
vicesar
e
dif
ferent
,

theydon’thav
ethesamenameandsamebandwi
dth.Si
ncet
her
e’sav
erysl
i
ght
di
ffer
encein

scope,
mer
chantbanksandi
nvest
mentbanksar
eof
tensy
nony
mous.
 CHAPTER:
II
REVI
EW OFLI
TERATURE

I
ntr
oduct
ion

Mer
chantbanki
ngi
sfi
nanci
ali
nst
it
uti
onswhi
chpr
ovi
decapi
tal
tot
hecompanyi
nthe
f
orm of
shar
eowner
shi
p.I
tal
sopr
ovi
dingadv
icet
othecor
por
atesect
ori
nwhi
cht
heyi
nvest
money.
Merchantbanki
ngi
sinnotonl
yadv
isorbutal
sopr
inci
ple.Mer
chantbanki
nghasal
ong
-
ter
m
appr
oacht
hani
nvest
ment
.Itpr
ovi
desr
ightadv
icet
oeachcl
i
ent
.Mer
chantbanki
ngi
sa
tradi
ti
onalt
ermi
tal
sodescr
ibest
hepr
ivat
eequi
ty.Mer
chantbanki
nghel
psi
nthe
corpor
ate
sect
orwhi
chr
efl
ect
sint
oeconomi
cdev
elopmentoft
hecount
ry.
Mer
chantbanki
ngpr
ovi
dev
ari
ousf
unct
ionl
i
kepor
tfol
i
omanagement
,under
wri
ti
ng,
counsell
ing,
loansy
ndi
cat
ion.Mer
chantbanki
ngi
scombi
nat
ionofbanki
ngand
consul
tancy
ser
vices.

Waghmar
eShi
vaj
i(2015)
:
Global
izat
ionmadewhol
eIndi
aneconomyopenwhi
chhasamul
ti
pler
olei
nthe
f
inanci
al
servi
ces.Nowaday
’sgov
ernmentopent
hedoorofi
nvest
menti
nthear
eaofi
nsur
ance
and
bank.Whi
chpr
ovi
decompet
it
iveenv
ironmentf
orpr
esentpl
ayer
?Mer
chantbanki
ngi
s
an
i
nnov
ati
vet
ermi
ntr
oducedbycommer
cial
bank.Theneedf
ort
hemer
chantbanki
ngi
s
pronouncedbybanki
ngcommi
ssi
on(
1972)
.Mer
chantbanki
ngof
ferf
ee-
basedandnon
-
fee
-basedser
vicesl
i
kel
oansy
ndi
cat
ion,
under
wri
ti
ng,
proj
ectpr
omot
ion,
adv
isor
ytosmal
l
and
medi
um sav
ers.I
nIndi
amer
chantbanki
ngwor
kunderSEBI
.

Dr
.Si
nghandDr
.Saxena(
2017)
:

Mer
chantbanki
ngconsi
stsofwi
der
angeoff
inanci
alact
ivi
ti
esandf
inanci
ali
nst
it
uti
on.
Merchantbankcal
l
ed“
Acceptandi
ssuehouse”
.Becausemer
chantbanki
ngact
ingas
br
oker
andpri
nci
ple.Mer
chantbanki
nghasal
ong-
ter
m appr
oachconcer
nedwi
theach
i
nvest
ment
oppor
tuni
tyandpr
ovi
desr
ightadv
icet
oeachcl
i
entoft
hecompany
.Mer
chantbanki
ng
i
sa
ser
vicepr
ovi
dedbymanyf
inanci
ali
nst
it
uti
onst
oincr
easegr
owt
hofcor
por
atesect
or
whi
ch
ref
lectint
oIndi
aneconomy
.Mer
chantbanki
ngi
sacombi
nat
ionofconsul
tancy
ser
vicesand
banki
ng.
Dr
.Jy
oti
Lahot
i(2016)
:

Merchantbanki
ngi
sser
vicepr
ovi
dedbyf
inanci
ali
nst
it
uti
onwhi
chhel
psi
nthe
economic
dev
elopmentoft
hecount
ry.Mer
chantbanki
ngpr
ovi
desv
ari
ousser
vicesl
i
kepor
tfol
i
o
management,
loansy
ndi
cat
ion,
andi
ssuemanagement
.Mer
chantbanki
ngi
sa
combi
nat
ionof
consult
ancyser
vicesandbanki
ng.I
thel
psi
nthebusi
nessuni
t.I
tal
sohel
pst
oincr
ease
thefund
andt
oexpandt
hebusi
ness.

CSGowt
ham (
2017)
:

Merchantbanki
ngi
ssueshar
e,debent
ures,
bankl
oant
othei
rcl
i
ent
s.Thi
sfi
nancei
s
usedfornew
busi
nessort
oexpandt
hebusi
ness,
tomodi
fyt
hebusi
ness.Mer
chantbanki
ngnotonl
y
pr
ovi
des
f
inancebutal
sopr
ovi
der
ightpat
hwi
thr
espectt
oSEBI
.

Shr
eyasB.
S(2016)
:

Mer
chantbanki
ngconsi
stofwi
der
angeoff
inanci
alact
ivi
ti
es.Mer
chantbanki
s
cal
l
ed
“Accept
ingandi
ssui
nghouse”Mer
chantbanki
ngi
srapi
dlygr
owi
ngi
nIndi
aneconomy
.
The
SEBIwhi
chgi
vesov
eral
lvi
ewofpr
esentandpast
.Mer
chantbanki
ngi
sol
desti
nthe
pr
imar
y
mar
ketandi
thasbr
ightf
utur
eincomi
ngy
ear
s.
AdamsAdewal
eAdegokeAl
awi
yeandBabat
undeAf
olabi
(2013)

focusedonthear
gument
sforuni
ver
sal
banki
ngespeci
all
yforef
fi
cientser
vicest
o
customersand
alsoforf
inanci
alsy
stemsst
abi
l
ityandpr
ofi
tabi
l
ity
,whi
l
e,t
hecompar
ati
vepr
act
iceof
univ
ersal
banki
ngi
nsomenot
abl
ecount
ri
esoft
hewor
ldwasal
sox-
ray
edbecauseuni
ver
sal
banki
ngi
sa
super
stor
ef orf
inanci
alpr
oduct
sunderasi
ngl
eroof
.Cor
por
atebodi
escanl
otof
oppor
tuni
ti
esof
uni
versal
banki
ngsy
stem ar
eyett
obef
ull
yexpl
oit
eduni
ver
sal
banki
ngbei
nga
worl
dwide
banki
ngbusi
nessphenomenoni
scont
inual
l
ybeensubj
ect
edt
oresear
chef
for
tsov
er
t
helast
cent
uryev
ery
wher
eint
hewor
ld.Uni
ver
sal
banki
ngi
sthepanaceat
oresusci
tat
eand
r
evampthe
businessofbanki
ngbackt
orecov
ery
,ef
fi
ciencyandwi
ndf
all
prof
it
abi
l
ity
.Thi
sis
especi
all
yso
from Uni
tedSt
atest
oGer
many
,Swi
tzer
land,
Bri
tai
n,andI
ndi
aandacr
ossal
lthe
establ
i
shed
financi
almar
ket
sandf
inanci
alsy
stemst
hrought
hewor
ld,
thei
mpactofuni
ver
sal
bankingon
thegrowthanddev
elopmentoft
hebanki
ngi
ndust
rycannotbeunder
est
imat
ed.
Ther
efore,
univer
sal
banki
ngi
spr
efer
abl
etospl
i
tbanki
ngsy
stem i
sthatwhi
chpr
ovi
desgr
eat
er
f
inanci
al
sy
stemsst
abi
l
ityandal
soof
ferbet
tersol
uti
onsf
orcust
omerser
vices.
Al
ber
taUgo(
2006)

Devel
opedausedt
oshowt
hepr
ovi
sionofi
ncent
ivesi
nauni
ver
sal
bank,
whi
chi
s
regar
dedasa
commonagentser
vingdi
ff
erentcust
omer
swi
thpot
ent
ial
l
yconf
li
cti
ngi
nter
est
sfor
exampl
e,i
t
maybuyasset
sonbehal
fofi
nvest
orsandsel
lasset
sonbehal
fofi
ssui
ngf
ir
ms.The
cust
omer
s
offerincent
iveschemest
othebankandt
heybehav
enon-
cooper
ati
vel
y.Thebank
decidesa
l
evelofef
for
tand,
whenf
ir
ewal
l
sar
eabsent
,al
evel
ofcol
l
usi
on,
model
edasacost
ly
and
unpr
oducti
ver
edi
str
ibut
ionofweal
thamongt
hecust
omer
s.Act
ual
l
yabsenceof
f
ir
ewall
sthe
equi
l
ibr
ium i
ncent
iveschemear
est
eeper
,meanst
hel
evel
ofef
for
tishi
gherandmay
compensat
etheex-
posti
nef
fi
ciencyofcol
l
usi
on.I
tshowednott
ohol
dint
hepr
esence
ofone
inexper
iencedpl
ayerwhodoesnotr
ecogni
zet
heexi
stenceoft
heconf
li
ctofi
nter
est
.
Themodel
all
owsdrawi
ngr
esul
taboutt
hedesi
rabi
l
ityoff
ir
ewal
l
sorofsof
termeasur
esl
i
ket
he
i
mposit
ion
oft
ranspar
encyr
equi
rement
s.

Zaf
arDr
.S.
M.Tar
ig(
2012)

Showedthatt
omai
ntai
nequi
l
ibr
ium amongdemandandsuppl
yinpr
esentgl
obal
economi
c
rev
oluti
on,technol
ogi
cal
andmet
amor
phi
cenv
ironment
aldev
elopment
sinsi
deand
out
sidethe
pol
it
icalboundar
ywhi
chhasanecessi
tyofbanki
ngr
evol
uti
onwhi
chcanef
fi
cient
ly
mobi
lize
andpr
oduct
ivel
yut
il
izepubl
i
csav
ings.Act
ual
l
y,t
heuni
ver
sal
banki
ngemer
gedasa
new
mechani
sm t
oper
for
mthi
sfunct
ionl
i
kef
inanci
alsuper
mar
ketwi
thdi
ver
sif
ied.
pr
oductunderoner
oof
.Ther
efor
e,t
oexpl
orepot
ent
ial
mul
ti
pur
posef
inanci
al
i
nsti
tut
ions/
univ
ersal
banki
ngi
nrespectt
oIndi
anmar
ketandt
hei
rfut
urei
nlongr
uni
nder
egul
ated
an
int
ensif
iedcompet
it
ionamongbanksandnonbanki
ngf
inanci
ali
nter
medi
ari
es.
Thus,
expect
ed
thatt
hemoder
nbanki
ngconceptoff
inanci
alsuper
mar
ket
swi
l
lpl
ayef
fect
iver
olei
n
bri
dgi
ng
thefi
nanci
algapandal
soexpect
edt
heheal
thycompet
it
ionamongdomest
icand
i
nter
nati
onal
fi
nanci
algi
antwi
l
lbeadv
ant
ageousf
orcust
omer
sduet
onewhi
ghbr
eedf
inanci
al
pr
oductand
speci
ali
zedser
vices.

Chapt
erI
II

Resear
chMet
hodol
ogy

Whati
sresear
ch?

Research i
s"cr
eat
ive 
andsy
stemat
icwor
kunder
takent
oincr
easet
hest
ock
of
 knowledge,
incl
udingknowl
edgeofhumans,
cul
tur
eandsoci
ety
,andt
heuseoft
hisst
ockof
knowledgeto
dev
isenewappl
i
cat
ions.
” 
ori
not
herhandResear
chi
sapr
ocessofst
epsusedt
o
col
l
ectand
anal
yzei
nfor
mat
iont
oincr
easeourunder
standi
ngofat
opi
cori
ssue.Atagener
all
evel
,
researchconsi
stsoft
hreest
eps:
1.Poseaquest
ion.2.Col
l
ectdat
atoanswert
he
questi
on.3.
Presentananswert
othequest
ion.Thi
sshoul
dbeaf
ami
l
iarpr
ocess.Youengagei
n
sol
ving
probl
emsev
erydayandy
oust
artwi
thaquest
ion,
col
l
ectsomei
nfor
mat
ion,
andt
hen
f
orm an
answerResear
chi
simpor
tantf
ort
hreer
easons.
1.Resear
chaddst
oourknowl
edge:
Addi
ng
toknowl
edgemeanst
hateducat
orsunder
taker
esear
cht
ocont
ri
but
etoexi
sti
ng
i
nfor
mati
on
aboutissues2.
Resear
chi
mpr
ovespr
act
ice:
Resear
chi
sal
soi
mpor
tantbecausei
t
suggests
improv
ement
sforpr
act
ice.Ar
medwi
thr
esear
chr
esul
ts,
teacher
sandot
hereducat
ors
become
moreef
fect
ivepr
ofessi
onal
s.3.Resear
chi
nfor
mspol
i
cydebat
es:
resear
chal
so
pr
ovi
des
i
nfor
mat
iont
opol
i
cymaker
swhent
heyr
esear
chanddebat
eeducat
ional
topi
cs.

Ty
pesofr
esear
ch

° Expl
orat
oryr
esear
ch,
whi
chhel
pst
oident
if
yanddef
ineapr
obl
em orquest
ion.
° Const
ruct
iveresear
ch,
whi
cht
estt
heor
iesandpur
posessol
uti
ont
oapr
obl
em or
sol
uti
onquesti
on.
° Empi
ri
cal
resear
ch,
whi
cht
estt
hef
easi
bil
i
tyofasol
uti
onusi
ngempi
ri
cal
evi
dence.

Whati
sresear
chmet
hodol
ogy
?

Methodologyi
sthesy
stemat
ic,
theor
eti
cal
anal
ysi
soft
hemet
hodsappl
i
edt
othef
iel
d
ofstudy
.
Itcompr
isest
het
heor
eti
canal
ysi
soft
hebodyofmet
hodsandpr
inci
plesassoci
ated
wit
hthe
branchofknowl
edge.Ty
pical
l
y,i
tencompassesconcept
ssuchaspar
adi
gm ,
t
heoreti
cal
model,
phasesandquant
it
ati
veandqual
i
tat
ivet
echni
que.

Amet
hodol
ogydoesn’
tsetoutt
opr
ovi
desol
uti
onsi
.enott
hesameasmet
hod.I
nst
ead
a
met hodol
ogyof
fer
sthet
heor
eti
cal
under
pinni
ngf
orunder
standi
ngwhi
chmet
hodor
setof
met
hodscanbeappl
i
edt
oaspeci
fi
ccase.

3.
1Ty
pesofdat
acol
l
ect
ion

Pr
imar
yDat
aCol
l
ect
ion

Pr
imarydat
acol
l
ect
ionbydef
ini
ti
oni
sthegat
her
ingofr
awdat
acol
l
ect
edatt
hesour
ce.
I
tisa

processofcol
l
ect
ingt
heor
igi
nal
dat
acol
l
ect
edbyar
esear
cherf
oraspeci
fi
cresear
ch
purpose.

Itcoul
dbef
urt
heranal
yzedi
ntot
wosegment
s;qual
i
tat
iver
esear
chandquant
it
ati
ve
data

col
l
ect
ionmet
hods.
 

Met
hodofCol
l
ect
ingPr
imar
yDat
a

Pr
imar
ydat
amaybeobt
ainedbyappl
yi
nganyoft
hef
oll
owi
ngmet
hod:
-
9)Di
rectper
sonal
int
erv
iews
10)
Indi
rectper
sonal
int
erv
iews
11)
Inf
ormat
ionf
orm cor
respondence
12)
Mai
l
edquest
ionnai
re
13)
Quest
ionnai
ret
obef
il
ledbyenumer
ator
s.

14)
Qual
i
tat
iveResear
chMet
hod 

Thequal
i
tat
iver
esear
chmet
hodsofdat
acol
l
ect
iondoesnoti
nvol
vet
hecol
l
ect
ionof
dat
athat

i
nvol
vesnumber
soraneedt
obededucedt
hroughamat
hemat
ical
cal
cul
ati
on,
rat
heri
t
i
sbased

onthenon-
quant
if
iabl
eel
ement
sli
ket
hef
eel
i
ngoremot
ionoft
her
esear
cher
.An
exampl
eof

suchamet
hodi
sanopen-
endedquest
ionnai
re.

15)
Quant
it
ati
veMet
hod

Quant
it
ati
vemet
hodsar
epr
esent
edi
nnumber
sandr
equi
reamat
hemat
ical
cal
cul
ati
on
t
odeduce.
Anexampl
ewoul
dbet
heuseofaquest
ionnai
rewi
thcl
ose-
endedquest
ionst
oar
ri
veat
f
igur
es
tobecal
cul
atedMat
hemat
ical
l
y.Al
so,
met
hodsofcor
rel
ati
onandr
egr
essi
on,
mean,
modeand
medi
an.

Sur
vey

Thesear
ebasi
cal
l
yquest
ionnai
reswi
thasetofcar
eful
l
ydesi
gnedquest
ionsposedt
o
y
ourt
argetpopul
ati
on.Sur
veycanbeadmi
nist
eredbymai
l
,tel
ephoneorbyt
hei
nter
net
.

Tool
sandTechni
ques

Tool
s andt
echni
quesi
nresear
char
ethest
ati
sti
calmet
hodsofcol
l
ect
ionanal
ysi
s
i
nter
pret
ati
on,
present
ati
on,
andor
gani
zat
ionofdat
a.

St
ati
sti
cspr
ovi
desnumer
oust
ool
sandt
echni
quest
oanal
ysi
sthedat
aandi
nter
prett
he
r
esul
tsoft
heanal
ysi
s.I
nmyst
udyIhav
eusedt
hef
oll
owi
ngst
ati
sti
calt
ool
sfort
he
anal
ysi
sofcol
l
ect
eddat
a.

• Av
erage

• Per
cent
age

• BarGr
aph

• Pi
eGr
aph

3.
2Obj
ect
ivesoft
heSt
udy

1.Toexami
net
her
oleofmer
chantbanki
ngi
npr
omot
ingcapi
tal
mar
keti
nIndi
a.
2.Tost
udyt
her
ulesandr
egul
ati
onsofSEBIf
ormer
chantbanker
sasi
ssue
manager
s.
3.Toev
aluat
etheper
for
manceoft
hemer
chantbanker
s.
4.Tost
udyt
hemar
ket
ingaspect
soft
hemer
chantbanker
srel
ati
ngt
othei
ssue.
5.Tost
udyt
heef
fect
ivenessofpr
ici
ngoft
he‘
i
ssues’
(asdet
ermi
nedbyi
ssui
ng
companyandt
hemer
chantbanker
).
6.Tomakeappr
opr
iat
erecommendat
ionst
omer
chantbanker
sfori
mpr
ovi
ng
t
hei
rper
for
mance.

Pur
poseoft
hest
udy

Needfor 
mer
chantbanki
ng 
i
sfel
tint
hewakeofhugepubl
i
csav
ingl
yi
ngunt
apped.
Merchant

bankercanpl
ayhi
ghl
ysi
gni
fi
cantr
olei
nmobi
l
izi
ngf
undsofsav
erst
oinv
isi
ble
channel
s

assur
ingpr
omi
si
ngr
etur
nsoni
nvest
mentandt
huscanassi
sti
nmeet
ingt
hewi
deni
ng
demand
fori
nvisi
blef
undsf
oreconomi
cact
ivi
ty.Wi
thgr
owt
hofmer
chantbanki
ngpr
ofessi
on
cor
porate

enterpr
isesinbothpri
vat
esect
orswoul
dbeablet
orai
serequi
redamountoff
unds
annuall
yfrom
thecapitalmarkett
omeetthegrowi
ngr
equi
rementf
orfundsf
orest
abli
shi
ngnew
enter
pri
ses,

under
taki
ngexpansi
on,
moder
nizat
ionanddi
ver
sif
icat
ionoft
heexi
sti
ngent
erpr
ises.
Thi
s

r
einf
orcest
heneedf
orav
igor
ousr
olet
obepl
ayedbymer
chantbanki
ng.

 Gr
owi
ngcompl
exi
tyi
nrul
esandpr
ocedur
esoft
hegov
ernment
.
 Gr
owi
ngi
ndust
ri
ali
zat
ionandi
ncr
easeoft
echnol
ogi
cal
l
yadv
ancedi
ndust
ri
es.
 Needf orencour
agementofsmal
landmedi
um i
ndust
ri
ali
sts,whor
equi
respeci
ali
st
ser
vices.
 Needt
odev
elopbackwar
dar
easandst
ateswhi
chr
equi
redi
ff
erentcr
it
eri
a.
 Expl
ori
ngt
hepossi
bil
i
tyofj
ointv
ent
uresabr
oadandf
orei
gnmar
ket
.
 Pr
omot
ingt
her
oleofnewi
ssuemar
keti
nmobi
l
izi
ngsav
ingf
rom.

3.
3Scope/
Popul
ati
onoft
heSt
udy

Thesel
ect
edmer
chantbankscr
eat
eempl
oymentoppor
tuni
ti
esf
ort
hecount
ry.I
thas
been
obser
vedthati
nvest
menti
nsecur
it
ies,
broker
agecommi
ssi
on,
under
wri
ti
ng
commissi
on,margi
n
l
oant
ocl
i
ent
s,cor
por
ateadv
isor
yser
vices,
issuemanagementf
ees,
por
tfol
i
o
managementf
ees,
document
ati
onf
ees,
set
tl
ementandt
ransact
ionf
eesoft
hesel
ect
ed
merchantbankshav
eincr
easedf
rom t
hepr
evi
ousy
eardur
ing2011-
2015.I
tisal
so
r
efl
ected
f
rom t
heanal
ysi
sthatt
hemar
ginl
oant
ocl
i
ent
,capi
tal
gai
nfr
om secur
it
iesoft
he
sel
ect
ed
mer
chantbanksi
srel
ati
vel
yhi
ghdur
ing2011-
2015.I
tindi
cat
est
hepr
ofi
tabi
l
ityofal
lthe
select
edmerchantbanksi
squi
tesat
isf
act
ory
.Thest
udyr
eveal
edt
hatev
eryy
ear
brokerage
commissi
on,
set
tl
ementandt
ransact
ionf
ees,
issuemanagementf
ees,
cor
por
ate
advi
sor
y
ser
v i
cesofthesel
ect
edmer
chantbanksi
ncr
easedatadecr
easi
ngt
rendwhi
ch
i
ndicatedt
he
sel
ectedmer
chantbanksshoul
dfocusmor
eandempl
oyef
fi
cientmanpowert
othi
s
sect
or.

Al
ltheSEBIr
egi
ster
edmer
chantbanker
swer
enoti
nvol
vedi
nthei
ssue
managementact
ivi
ti
esdur
ingt
heper
iodunderr
evi
ew.Sot
hesampl
eofmer
chant
banker
sconsi
stsoft
hose,
whower
eassoci
atedwi
thpubl
i
cissuemanagement
act
ivi
ti
esi
nanycapaci
tydur
ingt
heper
iod.

Met
hodsusedt
ocol
l
ectdat
a

Datacoll
ect
ioni
sthepr
ocessofgat
her
ingandmeasur
ingi
nfor
mat
iononv
ari
abl
esof
i
nterest
,
inanestabl
ishedsy
stemat
icf
ashi
ont
hatenabl
esonet
oanswerst
atedr
esear
ch
quest
ions,
testhypot
heses,andev
aluat
eout
comes.Thedat
acol
l
ect
ioncomponentof
r
esearchis
commont oal
lfi
eldsofst
udyi
ncl
udi
ngphy
sical
andsoci
alsci
ences,
humani
ti
es,
busi
ness,
etc.
Whilemet
hodsv
arybydi
sci
pli
ne,t
heemphasi
sonensur
ingaccur
ateandhonest
col
l
ecti
on
remai
nst
hesame.Thegoal
foral
ldat
acol
l
ect
ioni
stocapt
urequal
i
tyev
idencet
hat
t
hen
transl
atest
ori
chdat
aanal
ysi
sandal
l
owst
hebui
l
dingofaconv
inci
ngandcr
edi
ble
answerto
quest
ionst
hathav
ebeenposed.

Pr
imar
yDat
a

Pr
imarydat
acol
l
ect
ionbydef
ini
ti
oni
sthegat
her
ingofr
awdat
acol
l
ect
edatt
hesour
ce.
I
tisa

processofcol
l
ect
ingt
heor
igi
nal
dat
acol
l
ect
edbyar
esear
cherf
oraspeci
fi
cresear
ch
purpose.

Forthi
sproj
ectt
her
eisl
esspr
imar
ydat
aasi
twasnotpossi
blet
ovi
sitmer
chant
banker
s.

Hencef
ocuswasmor
eonsecondar
ydat
a.

Met
hodofCol
l
ect
ingPr
imar
yDat
a

Pr
imar
ydat
amaybeobt
ainedbyappl
yi
nganyoft
hef
oll
owi
ngmet
hod:
-

Thr
ought
hemodeofquest
ionnai
re.

Di
rectobser
vat
ion.

Secondar
yDat
a

Books
Newspaper
s
Magazi
ne
Websi
tesl
i
ke:
www.
mer
chant
banki
ngi
nIndi
a.com,
www.
googl
e.com et
c

3.
4Li
mit
ati
onsoft
hest
udy
Alt
houghsomemer
chantbankspr
ovi
dei
nvest
mentbanki
ngser
vices,
mostoft
hem wi
l
l
not

providearegul
arbanki
ngser
vicet
otheav
erageper
son.You’
renotgoi
ngt
ohav
ea
checkingor

sav
ingsaccountappr
ovedaty
ourav
er chantbank.
agemer

1.
Youraccountwi
l
lbemor
eexpensi
vet
hanat
radi
ti
onal
bankaccount
.

Merchantbankst
endt
ochar
gehi
gherf
eesf
ort
hei
rser
vicescompar
edt
otr
adi
ti
onal
banki
ng

ser
vicesandpr
oduct
s.Youmayber
equi
redt
ohav
eami
nimum networ
tht
owor
kwi
th
t
he

bank,hav
easpeci
fi
cpor
tfol
i
oal
readydev
eloped,
orhav
east
rongcr
edi
tpr
ofi
l
ewi
tha
hi
stor
y

ofproj
ectdev
elopmentt
oqual
i
fyf
ort
hebank’
sser
vices.Al
thoughy
oumayr
ecei
vet
he
i
nit
ial

consul
tat
ionorev
aluat
ionf
orf
ree,
ther
eisnoguar
ant
eey
ourcompanywi
l
lbeaccept
ed.

2.Youhav
esi
zeconsi
der
ati
onswhi
chmustbemet
.

ThankstotheInt
ernet
,anyst
art
uporSMBhast
hepot
ent
ial
toent
eri
ntoan
i
nternat
ional
market.

Justbecausey
ouar
epr
esentsomewher
eint
ernat
ional
l
ydoesnotmeant
haty
ou’
re
goi
ngto

qual
i
fyf
ort
heser
vicesamer
chantbankpr
ovi
des.Ther
ear
eusual
l
ysi
zeconsi
der
ati
ons
t
hat

mustbemet
,whi
chmayi
ncl
uder
evenuemi
nimums,
busi
nessst
ruct
ure,
andmor
e.I
f
y
ou’
re

str
uctur
edasapar
tner
shi
porsol
epr
opr
iet
or,
you’
rel
essl
i
kel
ytogett
hechancet
o
workwit
ha
mer
chantbankonapr
ojectunl
essy
ou’
ret
ryi
ngt
oexpandt
hepor
tfol
i
ooft
hecompany
.

3.Youwi
l
lal
way
shav
ether
iskofami
xedchancef
orsuccess.

Merchantbanksmi
ghtdeci
det
owor
kwi
thy
ouonaf
inanci
ngpackage,
butt
hati
sonl
y
onestep

towardevent
ualsuccess.Asset
sar
eof
tenr
equi
redf
ort
heunder
wri
ti
ngpr
ocess,
especi
all
ywhen

abusinessi
snewt
oani
ndust
ry,
fir
stget
ti
ngst
art
ed,
orent
eri
ngi
ntot
hei
rfi
rst
i
nter
nati
onal

mar ket
.Thoseasset
smi
ghtneedt
ocomef
rom t
heper
sonal
asset
soft
heC-
Sui
tet
o
securesome

fi
nanci
ng.Mer
chantbanksar
eli
keal
lot
herbanks–t
heyl
i
ket
oinv
estwhent
heyknow
t
hereis

agoodchancef
orar
etur
n.

4.You’
renotgoi
ngt
orecei
vest
art
-upf
undi
ng.

Mostmerchantbanksar
eint
hebusi
nessofhel
pingy
ourcompanyscal
eupwar
d.The
f
ocusis

usual
l
yonint
ernat
ional
mar
ket
s,buti
ntheUni
tedSt
ates,
mov
ingi
ntoanewst
ateor
communi
ty

mayqual
i
fyf
orbanki
ngsuppor
t.Whaty
ou’
renotgoi
ngt
orecei
vei
sst
art
-upf
undi
ng.
Your

busi
nessmusthav
eanest
abl
i
shedr
ecor
dofsomesuccesst
otakeadv
ant
ageoft
he
serv
ices

whichar
ebei
ngof
fer
ed.And,
ify
ouar
eappr
ovedandy
ourbusi
nessi
sst
il
lyoung,
you’
l
l
hav
e

st
ri
ctr
epay
mentgui
del
i
nesandsmal
l
eramount
sof
fer
edf
orf
undi
ng.
5.Youhav
enocont
rol
overy
ouri
nter
estr
atesorr
etur
ns.

Thi
sissuemaybet
hebi
ggestdi
sadv
ant
ageofwor
kingwi
thamer
chantbank.Mostwi
l
l
not

prov
ideaguar
ant
eedr
etur
nify
ouhav
ethem managi
ngy
ouri
nvest
mentpor
tfol
i
o.I
f
y
outake

onalendi
ngpr
oductt
oexpandt
hephy
sical
asset
sofy
ourcompany
,theny
ouhav
e
l
i
ttl
econtr
ol

overt
heint
erestr
atesassi
gnedt
othel
endi
ngpr
oduct
.Yourpr
ofi
l
eisbasedont
he
per
cei
ved

andrealr
iskst
hatt
hebankf
eel
sar
epr
esentwhenwor
kingwi
thy
ou.I
fyourcompanyi
s
seenas

high-r
isk,
eveni
fitt
urnsoutt
obeal
ow-
ri
skv
ent
ure,
you’
regoi
ngt
opaymor
efort
he
serv
ices

r
ecei
ved.

6.
Youmaynotr
ecei
vecompl
etef
undi
ng.

Onewaythatmer
chantbankshel
ptospr
eadr
iskl
evel
sar
oundi
stopr
ovi
dei
ncompl
ete
fundi
ng

forleases,
expansi
ons,
andot
heri
nvest
mentneeds.Thatf
orcesy
ourcompanyt
owor
k
wit
h

mult
ipl
emerchantbanksi
nst
eadofone.Theybenef
itbecauseeachnewcont
ri
but
or
l
owerst
hei
r

over
allr
isk.You’
rest
uckmaki
ngmul
ti
plepay
ment
sformul
ti
plepr
oduct
sorpay
ing
dupl
icat
e

f
eesf
orsi
mil
arser
vicesunt
ily
ourr
iskpr
ofi
l
ecanbel
ower
ed.
7.Youmaynothav
eaccesst
oev
erypot
ent
ial
product
.

Tradi
ti
onal
banksmaybewi
l
li
ngt
olendmoneyt
oyouwhenamer
chantbankdoesnot
.
Thati
s

becauset
radi
ti
onal
bankst
endt
oof
ferav
ari
etyofpr
oduct
swhi
chl
ower
sthei
rov
eral
l
r
isk

pr
ofi
l
eint
ernal
l
y,whi
chi
sapr
act
icet
hatnotev
erymer
chantbankmayf
oll
ow.I
fyou’
re

thi
nkingaboutcr
eat
ingCDl
adder
sandot
herconser
vat
ivei
nvest
ment
s,i
tmaybe
wort
hwhileto

seewhatyourl
ocal
bankorcr
edi
tuni
oncoul
dof
fer
,ev
eni
fyourbusi
nessi
scl
assi
fi
ed
asal
arge

cor
por
ati
on.

8.Youwi
l
lbei
nvest
igat
edaspar
toft
hef
undi ocess.
ngpr

I
tmaybemar
ket
edasaf
reeev
aluat
ion,
butwhatamer
chantbanki
sreal
l
ydoi
ngi
sa
det
ail
ed

investi
gat
ionofal
lyourbusi
nessaf
fai
rs.Theywi
l
llookaty
ourf
inanci
alst
ruct
ure,
evaluat
ethe

secur
it
yofy
ourasset
s,andev
enj
udgey
ourper
sonal
sur
eti
es.I
fsomet
hingi
sfoundt
o
beout
-

of-
orderdur
ingt
hei
rinv
est
igat
ion,
itcoul
dimpactt
hecr
edi
tpr
ofi
l
eoft
hecompany
.At
thevery

least
,thet
ermsandcondi
ti
onsr
equest
edofy
oumaybenear
lyi
mpossi
blet
omeet
,
whichmeans

ei
therchangi
ngt
hest
ruct
ureofy
ourbusi
nessorl
ooki
ngf
orf
undi
ngel
sewher
e.

9.Youdonothav
eaguar
ant
eeofar
enewal
orext
ensi
on.

Whenf undsaremadeav
ail
abl
ethr
oughmer
chantbanki
ng,
theyar
egener
all
y
accessi
blefora
shortti
meper
iodonl
y.Recei
vi
nganext
ensi
onoft
heagr
eement
,orar
enewal
,maybe
uncer
tai
n

–i fnoti
mpossi
ble.Long-
ter
mfundi
ngi
ssomet
imesav
ail
abl
ethr
oughmer
chant
banking,
but

mostoft hepr
oject
sthatar
eappr
ovedar
ebasedona5-
yearper
iodorl
ess.Theonl
y
except
ionto

t
hisr
ulei
nvol
vest
hosewhousemer
chantbanksf
ori
nvest
mentpur
posesi
nst
eadof
f
undi
ng

pur
poses.

10.
Youmayhav
eaddedr
epor
ti
ngr
equi
rement
st .
omeet

Amerchantbankwi
l
lhel
pyoumakesur
ethaty
ou’
reawar
eofy
ourr
egul
ator
y
r
equi
rements.

Whattheywi
l
lnotdoi
scr
eat
ether
epor
tsf
ory
ou.Wheny
oubegi
nwor
kingwi
tha
mer
chant

bank,
ther
emaybeaneedf
oraddeddi
scl
osur
etoanyst
akehol
der
sthatar
eassoci
ated
wi
thyour

business.Ther
ear
eal
mostal
way
saddi
ti
onal
cost
sassoci
atedwi
thaddedr
epor
ti
ng
and

compl
i
ancer
equi
rement
s.

Resear
chgap

Themer
chantbanki
ngopenst
hedoorf
ormanypl
ayer
swi
tht
hef
orcesofgl
obal
i
sat
ion
and

rev
oluti
onin21stcent
ury
.So,
ithasbecomecompul
sor
yforal
lthecat
egor
iesof
merchant

banki
ngt
omakehar
dmar
ket
ingef
for
tst
otapt
heoppor
tuni
typr
evai
l
ingi
nthemar
ket
andto

sur
viv
eint
het
imeofcutt
hroatcompet
it
iont
hroughat
tr
act
,ret
ainandsat
isf
ythei
r
cust
omer
s.

From t
her
evi
ewofl
i
ter
atur
e,t
her
esear
cherconcl
udest
hatv
eryf
ewr
esear
chhav
e
been

conduct
edaboutt
her
oleofmer
chantbanki
ngi
nthegr
owt
hofcapi
tal
mar
ket
.The
pr
esentst
udy

i
sdev
otedt
ofi
ndoutt
heper
for
manceshi
ft
ingi
n2010-
2014.

Chapt
er4

Dat
aanal
ysi
sandi
nter
pret
ati
on

4.
1MEANI
NGOFDATAANALYSI
S
Dat
aanal
ysi
sisapr
ocessofi
nspect
ing,
 
cleansi
ng,
 
transf
ormi
ng 
and 
model
i
ng 
dat
a wi
th

t
hegoal
ofdi
scov
eri
ngusef
uli
nfor
mat
ion,
inf
ormi
ngconcl
usi
onandsuppor
ti
ngdeci
sion-

maki
ng.Dat
aanal
ysi
shasmul
ti
plef
acet
sandappr
oaches,
encompassi
ngdi
ver
se

t
echni
quesunderav
ari
etyofnames,
andi
susedi
ndi
ff
erentbusi
ness,
sci
ence,
and

soci
alsci
encedomai
ns.I
ntoday
'sbusi
nesswor
ld,
dat
aanal
ysi
spl
aysar
olei
nmaki
ng

deci
sionsmor
esci
ent
if
icandhel
pingbusi
nessesoper
atemor
eef
fect
ivel
y.

4.
2 PROCESSOFDATAANALYSI
S

Dat
arequi
rement
s
Thedat
aar
enecessar
yasi
nput
stot
heanal
ysi
s,whi
chi
sspeci
fi
edbasedupont
he

r
equi
rement
soft
hosedi
rect
ingt
heanal
ysi
sorcust
omer
s(whowi
l
luset
hef
ini
shed

productoft
heanal
ysi
s).Thegener
alt
ypeofent
it
yuponwhi
cht
hedat
awi
l
lbe
col
lect
ed

i
sref
err
edt
oasanexper
iment
aluni
t.
Dat
acol
l
ect
ion
Dat
aar
ecol
l
ect
edf
rom av
ari
etyofsour
ces.Ther
equi
rement
smaybecommuni
cat
ed

byanal
yst
stocust
odi
ansoft
hedat
a,suchasi
nfor
mat
iont
echnol
ogyper
sonnel
wit
hin

anor
gani
zat
ion.Thedat
amayal
sobecol
l
ect
edf
rom sensor
sint
heenv
ironment
,such

ast
raf
fi
ccamer
as,
sat
ell
i
tes,
recor
dingdev
ices,
etc.
 

Dat
apr
ocessi
ng

Thephasesoft
he 
i
ntel
l
igencecy
cle 
usedt
oconv
ertr
awi
nfor
mat
ioni
ntoact
ionabl
e
i
ntel
l
igence
orknowl
edgear
econcept
ual
l
ysi
mil
art
othephasesi
ndat
aanal
ysi
s.
Dat
aini
ti
all
yobt
ainedmustbepr
ocessedoror
gani
sedf
oranal
ysi
s.Fori
nst
ance,
these
may

i
nvolv
epl
aci
ngdat
aint
orowsandcol
umnsi
nat
abl
efor
mat(
i.
e.,
 
str
uct
ureddat
a)f
or
f
urt
her

anal
ysi
s,suchaswi
thi
naspr
eadsheetorst
ati
sti
cal
sof
twar
e.

Dat
acl
eani
ng

Oncepr
ocessedandor
gani
sed,
thedat
amaybei
ncompl
ete,
cont
aindupl
i
cat
es,
orcont
ain

er
ror
s.Theneedf
ordat
acl
eani
ngwi
l
lar
isef
rom pr
obl
emsi
nthewayt
hatdat
aar
eent
eredand
st
ored.Dat
acl
eani
ngi
sthepr
ocessofpr
event
ingandcor
rect
ingt
heseer
ror
s.Commont
asks

i
ncl
uder
ecor
dmat
chi
ng,
ident
if
yingi
naccur
acyofdat
a,ov
eral
lqual
i
tyofexi
sti
ngdat
a,

dedupl
i
cat
ion,
andcol
umnsegment
ati
on.Suchdat
apr
obl
emscanal
sobei
dent
if
iedt
hrougha

v
ari
etyofanal
yti
cal
techni
ques.

Communi
cat
ion

Oncet
hedat
aar
eanal
yzed,
itmayber
epor
tedi
nmanyf
ormat
stot
heuser
soft
heanal
ysi
sto

suppor
tthei
rrequi
rement
s.Theuser
smayhav
efeedback,
whi
chr
esul
tsi
naddi
ti
onal
anal
ysi
s

Assuch,
muchoft
heanal
yti
cal
cycl
eisi
ter
ati
ve.

Whendet
ermi
ninghowt
ocommuni
cat
ether
esul
ts,
theanal
ystmayconsi
der
 dat
a

v
isual
i
zat
ion 
techni
quest
ohel
pcl
ear
lyandef
fi
cient
lycommuni
cat
ethemessaget
othe

audi
ence.Dat
avi
sual
i
zat
ionuses 
i
nfor
mat
iondi
spl
ays 
(suchast
abl
esandchar
ts)t
ohel
p

communi
cat
ekeymessagescont
ainedi
nthedat
a. 

4.
3 WHATI
SDATAI
NTERPRETATI
ON?
Dataint
erpr
etat
ionr
efer
stot
hei
mpl
ement
ati
onofpr
ocessest
hroughwhi
chdat
ais
rev
iewedfor

thepur
poseofar
ri
vi
ngatani
nfor
medconcl
usi
on.Thei
nter
pret
ati
onofdat
aassi
gnsa
meani
ngto

t
hei
nfor
mat
ionanal
yzedanddet
ermi
nesi
tssi
gni
fi
cat
ionandi
mpl
i
cat
ions.

Thei mport
anceofdat
aint
erpr
etat
ioni
sev
identandt
hisi
swhyi
tneedst
obedone
properl
y.Dat
a

isver
yli
kel
ytoar
ri
vef
rom mul
ti
plesour
cesandhasat
endencyt
oent
ert
heanal
ysi
s
pr
ocesswit
h

haphazar
dor
der
ing.Dat
aanal
ysi
stendst
obeext
remel
ysubj
ect
ive.Thati
stosay
,the
nat
ureand

goalofi
nter
pret
ati
onwi
l
lvar
yfr
om busi
nesst
obusi
ness,l
i
kel
ycor
rel
ati
ngt
othet
ype
ofdat
a

bei
ng anal
yzed.Whi
l
ether
e ar
e sev
eraldi
ff
erentt
ypes ofpr
ocesses t
hatar
e
i
mplement
edbased

on i
ndiv
idualdat
a nat
ure,t
he t
wo br
oadestand mostcommon cat
egor
ies ar
e
“
quant
it
ati
ve

anal
ysi
s”and“
qual
i
tat
iveanal
ysi
s”.

Yet,befor
eanyser
iousdat
aint
erpr
etat
ioni
nqui
rycanbegi
n,i
tshoul
dbeunder
stood
thatvi
sual

present
ati
onsofdat
afi
ndi
ngsar
eir
rel
evantunl
essasounddeci
sioni
smader
egar
ding
scal
esof

measurement
.Bef
oreanyser
iousdat
aanal
ysi
scanbegi
n,t
hescal
eofmeasur
ement
mustbe

deci
dedf
ort
hedat
aast
hiswi
l
lhav
eal
ong-
ter
mimpactondat
aint
erpr
etat
ionROI
.The
v
aryi
ng

scal
esi
ncl
ude:
 1)NominalScal
e: 
non-
numer
ic cat
egor
ies t
hatcannotbe r
anked orcompar
ed
quant
it
ati
vel
y.

Var
iabl
esar
eexcl
usi
veandexhaust
ive.

2)Ordi
nalScal
e: 
excl
usi
vecat
egor
iest
hatar
eexcl
usi
veandexhaust
ivebutwi
tha
l
ogical
order
.

3)Quali
tyr
ati
ngsandagr
eementr
ati
ngsar
eexampl
esofor
dinalscal
es(
i.
e.,good,
ver
ygood,fai
r

et
c.,
ORagr
ee,
str
ongl
yagr
ee,
disagr
ee,
etc.
).

4)Int
erv
al:
 
ameasur
ementscal
ewher
edat
aisgr
oupedi
ntocat
egor
ieswi
thor
der
ly
andequal

di
stancesbet
weent
hecat
egor
ies.Ther
eisal
way
sanar
bit
rar
yzer
opoi
nt.

5)Rat
io:
 
cont
ainsf
eat
uresofal
lthr
ee.

WHYDATAI
NTERPRETATI
ONI
SIMPORTANT?

Thepur
poseofcol
l
ect
ionandi
nter
pret
ati
oni
stoacqui
reusef
ulandusabl
einf
ormat
ion
andt
o

make the most inf

ormed deci
sions possi
ble.Fr
om busi
nesses,t
o newl
yweds
r
esear
chingt
hei
rfi
rst

home,dat
acol
l
ect
ionandi
nter
pret
ati
onpr
ovi
desl
i
mit
lessbenef
it
sforawi
der
angeof
i
nst
it
uti
ons

andi
ndi
vi
dual
s.

Data anal
ysi
sand i
nter
pret
ati
on,r
egar
dlessofmet
hod and qual
i
tat
ive/
quant
it
ati
ve
st
atus,may

i
ncl
udet
hef
oll
owi
ngchar
act
eri
sti
cs:

1)Dat
aident
if
icat
ionandexpl
anat
ion

2)Compar
ingandcont
rast
ingofdat
a
 3)I
dent
if
icat
ionofdat
aout
li
ers

4)Fut
urepr
edi
cti
ons

Dat
aanal y
sisandi
nter
pret
ati
on,i
ntheend,hel
psi
mpr
ovepr
ocessesandi
dent
if
y
pr
oblems.Iti
s

dif
fi
cul
ttogr
owandmakedependabl
eimpr
ovement
swi
thout
,att
hev
eryl
east
,mi
nimal
dat
a

col
l
ect
ionandi
nter
pret
ati
on.Whati
sthekeywor
d?Dependabl
e.Vaguei
deasr
egar
ding

perf
ormanceenhancementexi
stwi
thi
nal
linst
it
uti
onsand i
ndust
ri
es.Yet
,wi
thout
pr
operresear
ch

andanal
ysi
s,ani
deai
sli
kel
ytor
emai
ninast
agnantst
atef
orev
er(
i.
e.,
mini
mal
growt
h).
So…

whatareaf
ewoft
hebusi
nessbenef
it
sofdi
git
alagedat
aanal
ysi
sandi
nter
pret
ati
on?
Let
’st
ake

al
ook!

1.
Inf
ormed deci
sion-
maki
ng:
 
A deci
sioni
sonl
yasgood ast
heknowl
edget
hatf
ormed i
t.
I
nfor
med

dat
adeci
sionmaki
nghast
hepot
ent
ial
toseti
ndust
ryl
eader
sapar
tfr
om t
her
estoft
hemar
ket

pack.
 St
udi
eshav
eshown 
thatcompani
esi
nthet
opt
hir
doft
hei
rindust
ri
esar
e,onav
erage,
5%

mor
epr
oduct
iveand6%mor
epr
ofi
tabl
ewheni
mpl
ement
ingi
nfor
meddat
adeci
sion-
maki
ng

pr
ocesses.Mostdeci
siv
eact
ionswi
l
lar
iseonl
yaf
terapr
obl
em hasbeeni
dent
if
iedoragoal

def
ined.Dat
aanal
ysi
sshoul
dincl
udei
dent
if
icat
ion,
thesi
sdev
elopmentanddat
acol
l
ect
ion

f
oll
owedbydat
acommuni
cat
ion.

I
finst
it
uti
onsonl
yfol
l
owt
hatsi
mpl
eor
der
,onet
hatweshoul
dal
lbef
ami
l
iarwi
thf
rom gr
ade

school
sci
encef
air
s,t
hent
heywi
l
lbeabl
etosol
vei
ssuesast
heyemer
gei
nreal
time.I
nfor
med
deci
si
onmaki
nghasat
endencyt
obecy
cli
cal
.Thi
smeanst
her
eisr
eal
l
ynoend,
andev
ent
ual
l
y,

newquest
ionsandcondi
ti
onsar
isewi
thi
nthepr
ocesst
hatneedt
obest
udi
edf
urt
her
.The

monit
ori
ngofdat
aresul
tswi
l
linev
itabl
yret
urnt
hepr
ocesst
othest
artwi
thnew dat
aand
si
ght
s.

2) Ant
ici
pat
ing needs wi
tht
rends i
dent
if
icat
ion:
 
dat
ainsi
ght
s pr
ovi
de knowl
edge,and
knowl
edge

i
spower
.Thei
nsi
ght
sobt
ainedf
rom mar
ketandconsumerdat
aanal
yseshav
etheabi
l
ityt
oset

t
rendsf
orpeer
swi
thi
nsi
mil
armar
ketsegment
s.Aper
fectexampl
eofhowdat
aanal
ysi
scan

i
mpactt
rendpr
edi
cti
oncanbeev
idencedi
nthemusi
cident
if
icat
ionappl
i
cat
ion,
 
Shazam.The

appl
i
cat
ional
l
owsuser
stoupl
oadanaudi
ocl
i
pofasongt
heyl
i
ke,
butcan’
tseem t
oident
if
y.

User
smake15mi
l
li
onsongi
dent
if
icat
ionsaday
.Wi
tht
hisdat
a,Shazam hasbeeni
nst
rument
al

i
npr
edi
cti
ngf
utur
epopul
arar
ti
sts.

Wheni
ndust
ryt
rendsar
eident
if
ied,
theycant
henser
veagr
eat
eri
ndust
rypur
pose.Forexampl
e,

t
hei
nsi
ght
sfr
om Shazam’
smoni
tor
ingbenef
it
snotonl
yShazam i
nunder
standi
nghowt
omeet

consumerneeds,
buti
tgr
ant
smusi
cexecut
ivesandr
ecor
dlabel
compani
esani
nsi
ghti
ntot
he

pop-
cul
tur
esceneoft
heday
.Dat
agat
her
ingandi
nter
pret
ati
onpr
ocessescanal
l
owf
ori
ndust
ry
-

wi
declimat
epr
edi
cti
onandr
esul
tingr
eat
err
evenuest
reamsacr
osst
hemar
ket
.Fort
his
r
eason,

alli
nst
it
uti
onsshoul
dfol
l
owt
hebasi
cdat
acy
cleofcol
l
ect
ion,i
nter
pret
ati
on,deci
sionmaki
ng
and

moni
tor
ing.

3)
 Costef
fi
ciency
: 
Properi
mpl
ement
ati
onofdat
aanal
ysi
spr
ocessescanpr
ovi
debusi
nesses
wi
th

pr
ofoundcostadv
ant
ageswi
thi
nthei
rindust
ri
es.Ar
ecentdat
ast
udyper
for
med
by
 Del
oit
te 
vi
vi
dlydemonst
rat
est
hisi
nfi
ndi
ngt
hatdat
aanal
ysi
sROIi
sdr
ivenbyef
fi
cientcost

r
educt
ions.Of
ten,
thi
sbenef
iti
sov
erl
ookedbecausemaki
ngmoneyi
sty
pical
l
yvi
ewedas

“
sexi
er”t
hansav
ingmoney
.Yet
,sounddat
aanal
yseshav
etheabi
l
ityt
oal
ertmanagementt
o

cost-r
educt
ionoppor
tuni
ti
eswi
thoutanysi
gni
fi
cantexer
ti
onofef
for
tont
hepar
tofhuman
capi
tal.

4.
4 DATAANDI
NTERPRETATI
ON

Gender

Mal
es-63℅

Femal
es-37℅

I
nter
pret
ati
on

Outof100r
esponses63℅ar
emal
erespondanceand37℅ar
emal
erespondance.
Doy
out
akeanyf
inanci
alser
vicesf
rom bank?

Yes–
81℅

No–
19℅

I
nter
pret
ati
on

Outof100r
espondance81℅ar
esat
isf
iedwi
tht
hef
inanci
alser
vicespr
ovi
ded

Byt
hebankand19℅ar
enotsat
isf
iedwi
tht
heser
vicespr
ovi
dedbyt
hebank.
Doy
ouknowaboutmer
chantbanki
ng?

Yes–
54℅

No-46℅

I
nter
pret
ati
on

Outof100r
espondance54℅ofpeopl
ear
eknowi
ngaboutmer
chantbanki
ng

And46℅ofpeopl
ear
eunawar
eofmer
chantbanki
ng.
Ar
eyousat
isf
iedwi
tht
heser
vicespr
ovi
dedbybank?

Yes-81℅

No–19℅

I
nter
pret
ati
on

Outof100r
espondance81℅peopl
esay
sYest
heyar
eget
ti
ngsat
isf
act
ion

wi
tht
heser
vicespr
ovi
dedbyt
hebankand19℅ofpeopl
esay
sNot
hey
ai
n’
tsat
isf
iedwi
tht
heser
vicespr
ovi
dedbyt
hebank.

Howmuchi
syourcur
renti
nvest
menti
ncapi
tal
mar
ket
s?

Rs5000–Rs50000 54℅

Rs50000–Rs10000014℅

Rs100000–Rs2000008℅

Rs200000-
Rs25000008℅
I
nter
pret
ati
on

Outof100r
espondance54℅ofpeopl
ehav
einv
est
edi
ncapi
tal
mar
ketupt
o

Rs5000-Rs50000.14℅oft
hepeopl
ehav
einv
est
edupt
oRs50000-
Rs100000

8℅oft
hepeopl
ehav
einv
est
edRs150000-
Rs200000and8℅oft
hepeopl
ehav
e

I
nvest
edupt
oRs200000-
Rs2500000i
ncapi
tal
mar
ket
.Thesur
veyshowsmor
e

Peopl
ear
einv
est
ingi
nther
angeofRs5000-
Rs50000.

Howl
onghav
eyoubeenani
nvest
orsi
ncapi
tal
mar
ket
?

1t
o2y
rs 47℅

2t
o3y
rs 26℅

4t
o5y
rs 19℅

6t
o10y
rs 8℅
I
nter
pret
ati
on

Outof100r
espondance47℅oft
hepeopl
ehav
einv
est
edi
ncapi
tal
mar
ket

Fordur
ati
onof1t
o2y
ear
s.26℅oft
hepeopl
ehav
einv
est
edsi
nce

1 t
o3y
ear
s,19℅oft
hepeopl
ehav
ebeeni
nvest
ingi
ncapi
tal
mar
ket

si
nce4t
o5y
ear
sand8℅peopl
efor6t
o10y
ear
s.

Whi
char
eaoft
hecapi
tal
mar
ket
sdoy
oucur
rent
lyhav
einv
est
edi
n?

PSUBonds 8℅

Equi
tyShar
es 24℅

Li
feI
nsur
ance 37℅

Mut
ual
Funds 20℅

Bob 11℅
Whati
sSBIdoi
ngt
oeducat
ethei
nvest
orsast
othei
rri
ght
sandobl
i
gat
ions?

Semi
nar
s 27℅
Press
Releases 24℅

Newspaper 22℅

Tel
evi
sion 19℅

Radi
o 1℅

Not
hing 7℅

I
nter
pret
ati
on

Outof100r
espondance27℅oft
hei
nvest
orsgof
orsemi
nar
s,24℅oft
hei
nvest
ors

Pr
eferpr
essr
eleases,
22℅oft
hei
nvest
orspr
efernewspaper
,19℅oft
hei
nvest
ors

pr
efert
hrought
elev
isi
on,
1℅oft
hei
nvest
orspr
eferr
adi
oand7℅oft
hei
nvest
ors

ar
enotsat
isf
iedwi
thanyoft
hese.

Doy
ouknowt
heser
vicespr
ovi
dedbymer
chantbank?
Yes-54 54℅

No-46 46℅

I
nter
pret
ati
on

Outof100r
espondance54℅oft
hepeopl
ear
eawar
eoft
heser
vices

pr
ovi
dedbyt
hemer
chantbankand46℅oft
hepeopl
ear
enotawar
e

ofmer
chantbank.

Whi
chbankpr
ovi
desy
oumaxi
mum ser
vices?
I
CICI 29℅

SBI 29℅

PNB 11℅

BOI 16℅

Other
Banks 15℅

I
nter
pret
ati
on

Outof100r
espondanceI
CICIandSBIhav
esamer
ati
othati
s29℅,
PNB11℅,

BOIi
s16℅andot
herbankspr
ovi
dingmaxi
mum ser
vicesi
s15℅.
Whatt
ypeofsecur
it
yyouhav
edeposi
tory
ouwi
l
ldeposi
twi
tht
hebanks?

Fi
xeddeposi
t69℅

Gol
d 14℅

Landpaper
s 5℅

Thi
rdpar
tysecur
it
y12℅

I
nter
pret
ati
on

Outof100r
espondance69℅oft
her
ati
ohav
efi
xeddeposi
twi
tht
hebanks

14℅oft
her
ati
ohav
epr
efert
okeepGol
dasasecur
it
ywi
tht
hebank,

5℅oft
her
ati
onpr
eferl
andpaper
sand12℅pr
efert
hir
dpar
tysecur
it
yas
modeofdeposi
tint
hebanks.

Chapt
er5

Concl
usi
on