INTRODUCTION:

Merchant bank is know as financial institution it gives a larger range of financial services
which are consultation, management, advice to an individuals or to a large corporate houses.
This merchant bank is a institution which takes larger part in business loans for companies,
international finance and underwriting. They are well known for international trade, which
shows them as specialist in dealing with multinational corporations. These banks does not
have an same definition some terms are used differently in different countries.in United
Kingdom they are termed as “accepting and issuing houses” and in united states it is termed
as “Investment bank”. The notification from the finance ministry in India defines merchant
banks 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”. Goldman Sachs, Credit Suisse
and Morgan Stanley are some of the world famous merchant banks. In India there are large
number of banks into this field some of them are State Bank of India, ICICI, Punjab National
Bank etc. Now there are 135 merchant bankers are registered with SEBI in India which
includes public sector, private sector and also foreign sectors. In 1967 when Grindlays bank
received the license the activity of the merchant bank was officially started into the Indian
capital markets. “Grindlays started its operation with management of capital issues,
recognized the requirements of upcoming class of enterpreneurs for diverse financial services
ranging frim 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”. In1983 the merchant bank became more importance when
there is a larger scope in primary market. Some of the merchant banking companies which
have been entered into the collaboration with merchant bankers of foreign countries abroad
with several branches. The first merchant bank was established in Italy and France in 17th and
18th centuries. It is started by the Italian grain merchant. It includes the merchant bankers who
assisted or intermediated in the financing transaction of other traders and their own trade also.
In the modern era the merchant banking is stared from London where they started to finance
the foreign trade in the way of acceptance of bill. After the period of time they were spread
their services to the government of under developed countries to increase the long term funds
throught floatation of bonds in London money market. Later they extended the services to
loan syndication, portfolio management , underwriting the issues etc. The merchant banking
activities has seen the larger increase in the post war period.