‘PROJECT REPORT IN A STUDY ON MERCHANT BANKING

FINANICAL SERVICES IN STATE BANK OF INDIA (SBI)

ACADEMIC YEAR 2021-2022

A project submitted to university of Mumbai for partial completion of the

Degree of
Master in Commerce
By
Bhavna Ganesh Gaikwad
ROLL NO. 46

Under the guidance of :

Dr. Neelam Shaikh
Sheth N.K.T.T.College, near kharkar aali, Thane (West)
May 2022
 Sheth N.K.T.T.College,Thane (west)

CERTIFICATE

This is certify that Mrs. Has worked and duly completed her project work for the of
degree of master in commerce under the faculty of commerce in the subject of
account and finance and her project is entitled, ‘A study on merchant banking in
financial services in state bank of india (SBI)’. Under my supervision.

I further certify that the entire work has been done by the learner under my guidance
and that no part of it has been submitted previously for any degree or diploma of any
university.

It is her own work and fact reported by her personal findings and investigation.

Date of Submission :
Name and signature of
Guiding Teacher

Internal Guide External Guide Co-ordinator

Principal
 Declaration by learner

I the undersigned mrs. Bhavna Ganesh Gaikwad here by, declare that the work
embodied in this project work titled ‘a study on merchant banking in financial
services in state bank of india’. Forms my own contribution to the research work and
has not been previously submitted to any other university for any degree/diploma to
this or any other university.

Wherever reference has been made to previous works, it has been clearly indicated as
such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

___________________________
Name and Signature of the learner

Certified by
Name and signature of the Guiding Teacher
__________________________
 Acknowledgment

To list who all have helped me is difficult because they are so numerous and the depth
is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh
dimensions in the completion of this project.
I take this opportunity to thank the university of Mumbai for giving me chance to do
this project.
I would like to thank my principal, Dr. Dilip Patil for providing the necessary
facilities required for completion of this project.
I take this opportunity to bank our coordinator Anil Khadse, for her moral support and
guidance.
I would like to thank to express my sincere gratitude towards my project guide
Dr. Neelam Shaikh whose guidance and care made the project successful.
I would like to my college library, for having provided various reference books and
magzines related to my project.
Lastly, I would like to thank each and every person who directly helped me in the
completion of the project especially my parents and papers who supported me
throughout my project.
 CHAPTER 1

INTRODUCTION :

Merchant banking is a professional service provided by the merchant

banks to their customers considering their financial needs, for adequate consideration
in the form of fee. Merchant banks are banks that conduct fundraising, financial
advising and loan services to large corporations.
In India, merchant banking services were started only in 1967 by National
Grindlays Bank followed by Citi Bank in 1970. The State Bank of India was the first
Indian commercial bank having set up a separate merchant banking Division in 1972.
The origin of merchant banking can be traced back to 13th century when a
few family owned and managed firms engaged in sale and purchase of commodities
were also found to be engaged in banking activity. Thus merchant Banking survived
and continued during the 13th century.

DEFINATION :

The term merchant bank refers to a financial institution that

conducts underwriting, loan services, financial advising, and fundraising services for
large corporations and high-net-worth individuals (HWNIs). Merchant banks are
experts in international trade, which makes them specialists in dealing with
multinational corporations. Unlike retail or commercial banks, merchant banks do
not provide financial services to the general public. Some of the largest merchant
banks in the world include J.P. Morgan Chase, Goldman Sachs, and Citigroup.

MEANING OF MERCHANT BANKING :

Merchant banking is a professional service provided by the

merchant banks to their customers considering their financial needs, for adequate
consideration in the form of fee. Merchant banks are banks that conduct fundraising,
financial advising and loan services to large corporations.
HISTORY OF MERCHANT BANKING

A merchant bank is historically a bank dealing in commercial

loans and investment. In modern British usage it is the same as an investment bank.
Merchant banks were the first modern banks and evolved from
medieval merchants who traded in commodities, particularly cloth merchants.
Historically, merchant banks' purpose was to facilitate and/or finance production and
trade of commodities, hence the name "merchant". Few banks today restrict their
activities to such a narrow scope.
In modern usage in the United States, the term additionally has
taken on a more narrow meaning, and refers to a financial institution providing capital
to companies in the form of share ownership instead of loans. A merchant bank also
provides advisory on corporate matters to the firms in which they invest.
Merchant banker is a person who provides assistance for the
subscription of securities. The merchant banker plays an important role and carries a
lot of responsibilities like, private placement of securities, managing public issue of
securities, stock broking, international financial advisory services, etc.
Today, a modern version of the merchant bank has begun to emerge,
with the traditional model reimagined for the 21st century and getting a contemporary
twist. Modern merchant banks like Umbra can offer a much wider array of activities
than our medieval counterparts, while appealing to discerning investors, funds and
companies with our differentiated model and fin tech approach. 

Umbra is pleased to be at the forefront of this timely revival of the

merchant banking model.

Merchant banking progressed to holding deposits for settlement of

“billette” or notes written by those who were still brokering the actual grain. This is
how the merchant’s trading benches (bank is derived from the Italian for
bench, banco, as in a counter),set up in the great grain markets, became places for
holding money against a billette (note) which evolved into a “bill of exchange” and
then a cheque.  These deposited funds were initially intended to be held for the
settlement of grain trades, but often were used for the bench’s own trades in the
meantime, and discounted interest rates were offered to depositors against what could
be earned by employing their money in the bench’s trade. 

A acquirer could also be a British term for a bank providing various

financial services like accepting bills arising out of trade, providing advice on
acquisitions, mergers, exchange underwriting new issues, and portfolio management
The Focus Definition: A acquirer are often generally described as a financial services
company with a private equity investment arm offering investment banking and
ancillary services also . Because a acquirer acts not only as an advisor and broker but
also as a principal, a acquirer features an extended run approach than a typical
investment bank and is extremely concerned with the viability of each investment
opportunity and providing the right advice for a strong partnership with each client
company. In banking, a acquirer could also be a standard term for an Investment
Bank. It can also be used to describe the private equity activities of banking.
ABSTRACT

Globalization of Indian Economy has made the whole economy open, which has
move multinational player in era of the financial services. Government has now open
up the doors of investments especially in the area of banks and insurance which leads
to competitive environment for the present players. The word merchant bank does not
have a fixed definition as this term is used differently in different countries. In general
the merchant banks are the financial services, solutions and advice to corporate
houses. Merchant banks are popularly called “Accepting and issuing houses”.
Merchant banking is one of the oldest and specialized financial intermediaries in the
primary market. Merchant banking is a much desired innovative step undertaken by
the commercial banks in India. The need for merchant banking was stressed by the
Banking Commission (1972). In India, at present, a substantial number of Merchant
Bankers are operating under the direct supervision of Securities and Exchange Board
of India (SEBI). The present study attempt has been made to evaluate the performance
of SBI capital market Ltd. in Merchant banking activities. The selected Merchant
Bank emphasis has given on categorization of Merchant Bankers and in this direction
the Merchant Bank which comes under the purview of Category-I registration with
Securities and Exchange Board of India has been chosen to appraise that performance.
MERCHANT BANKING IN STATE BANK OF INDIA (SBI)

INTRODUCTION :
In the year 1972, SBI became the first commercial bank to set up a
distinct division for merchant banking.
The State Bank of India was the first Indian Bank to set up merchant Banking division
in 1972. SBI Capital Markets Ltd. (SBICAP), India’s largest domestic Investment
Bank, began its operations in August 1986 and is a wholly owned subsidiary and
investment banking arm of State Bank of India (SBI), the largest commercial bank in
India. SBICAP offers the entire bouquet of Investment Banking and corporate
advisory services. The service bouquet includes the full range of financial advisory
services under one umbrella covering Project Advisory and Loan Syndication,
Structured Debt Placement, Capital Markets, Mergers and Acquisitions, Private
Equity and stressed Assets Resolution. As a complete solutions provider to clients in
investment banking and corporate advisory, SBICAP offers them advice, innovative
ideas, and unparalleled execution across all stages in their business cycle ranging
from venture capital advisory, project advisory, buy and sell-side advisory, accessing
financial markets to raise capital and even restructuring advisory in their turn-around
phases. SBICAP is a global leader in the area of Project Loan Syndication and has
lent crucial support to the Indian infrastructure sector. SBICAP is known for its astute
professionalism and business ethics. The team of execute The merchant banking
services help the entrepreneurs to come up with industrial setups in these areas.
Besides, the merchant banks help the entrepreneurs to explore the joint venture
opportunities in the foreign markets. Qualified and dedicated professionals with vast
experience in the fields of Project Advisory, M&A Advisory, Corporate Strategy or
Business Restructuring Advisory, arranging of Private Equity/Structured Finance,
Equity, Debt and Hybrid Capital rising. Headquartered in Mumbai, SBICAP has 6
regional offices across India (New Delhi, Kolkata, Hyderabad, Chennai, Bangalore
and Ahmedabad), 2 branch offices (Pune and Guwahati) and 5 subsidiaries – SBICAP
(Singapore) Limited. The regional offices are located strategically at major business
hubs in the country and closely liaise with clients at those and nearby centres.
SBICAP also offers services in the broad areas of mergers and acquisitions, project
advisory, Structural finance, and capital markets. Equity Broking and Research,
Security Agency and Debenture Trusteeship and Private Equity Investment and Asset
Management through its wholly- owned subsidiaries SBICAP Securities Limited,
SBICAP Trustee Co. Ltd. and SBICAP Ventures Limited, respectively.
VISION AND MISSION OF SBI MERCHANT BANKING

MISSION :
We will create products and services that help our customers achieve their
goals. We will go beyond the call of duty to make our customers feel valued. We will
be of service even in the remotest part of our country. We will offer excellence in
services to those abroad as much as we do to those in India.

VISION :
Founded in 1806, Bank of Calcutta was the first bank established in India
and over a period of time evolved into State Bank of India (SBI). SBI represents a
sterling legacy of over 200 years. It is the oldest commercial bank in the Indian
subcontinent, strengthening the nation’s trillion-dollar economy and serving the
aspirations of its vast population. The Bank is India’s largest commercial Bank in
terms of assets, deposits, branches, number of customers and employees, enjoying the
continuing faith of millions of customers across the social spectrum.
Headquartered at Mumbai, SBI provides a wide range of products and services to
personal, commercial enterprises, large corporates, public bodies and institutional
customers through its various branches and outlets joint ventures, subsidiaries and
associate companies.
 ADVANTAGES AND MIRITS OF MERCHANT BANKING

1. You will receive corporate counseling :

Merchant banks will usually provide corporate counseling as part of their
service package to corporate units. This is done to evaluate the overall financial
performance of a company that is seeking to make a splash in an international market.
These evaluations can help a company get feedback that is honest and critical to their
success, helping to build a better reputation amongst investors and stakeholders.
Suggestions, opinions, and even detailed reports may all be part of the counseling
process.

2. You will receive honest project feedback :

Merchant banks will work with your company to develop an idea for a
project or review the project profile you’ve already created. You’ll be able to
determine an estimated cost for the project, look for financing solutions, and begin to
create the action steps that are needed to get the project off the ground. Some
merchant banks will even provide help in obtaining government consent to get the
project started. You’re going to know if the idea you have is viable at the end of this
process.

3. You may be able to restructure your capital :

A merchant bank is able to offer relevant advice to companies about
mergers and acquisitions in their industry. They will examine the current capital
structure of the company and decide what the current extent of capitalization happens
to be. Alternative capital structures may be recommended to ensure regulatory and
legal compliance in foreign markets. Disinvestment issues may also be examined here
to ensure that any proposed project or investment has the best chance for success

4. You receive portfolio management :

Services are offered by merchant banks to investors and companies
which issue securities. Most clients of a merchant bank are institutional investors,
looking to create a secure portfolio that will help to build their wealth over time.
You’ll receive the necessary services that are required to provide you with an
investment mix that fits your needs, considering any tax bracket issues, objects, and
the overall return you’re looking to achieve. Merchant banks will also buy and sell
securities for their clients. Some even manage off-share funds and mutual funds too.
DISADVANTAGES AND DEMIRITS OF MERCHANT BANKING

1. Your account will be more expensive than a traditional bank account :

Merchant banks tend to charge higher fees for their services compared to
traditional banking services and products. You may be required to have a minimum
net worth to work with the bank, have a specific portfolio already developed, or have
a strong credit profile with a history of project development to qualify for the bank’s
services. Although you may receive the initial consultation or evaluation for free,
there is no guarantee your company will be accepted.

2. You have size considerations which must be met :

Thanks to the Internet, any startup or SMB has the potential to enter
into an international market. Just because you are present somewhere internationally
does not mean that you’re going to qualify for the services a merchant bank provides.
There are usually size considerations that must be met, which may include revenue
minimums, business structure, and more. If you’re structured as a partnership or sole
proprietor, you’re less likely to get the chance to work with a merchant bank on a
project unless you’re trying to expand the portfolio of the company.

3. You will always have the risk of a mixed chance for success :
Merchant banks might decide to work with you on a financing package,
but that is only one step toward eventual success. Assets are often required for the
underwriting process, especially when a business is new to an industry, first getting
started, or entering into their first international market. Those assets might need to
come from the personal assets of the C-Suite to secure some financing. Merchant
banks are like all other banks – they like to invest when they know there is a good
chance for a return.

4. You’re not going to receive start-up funding :

Most merchant banks are in the business of helping your company scale
upward. The focus is usually on international markets, but in the United States,
moving into a new state or community may qualify for banking support. What you’re
not going to receive is start-up funding. Your business must have an established
record of some success to take advantage of the services which are being offered.
And, if you are approved and your business is still young, you’ll have strict repayment
guidelines and smaller amounts offered for funding.
 Reasons for growth of Merchant Banking

There are a few reasons that accelerated the growth of these banks in India. Some of
the reasons are:

1. Globalization:
After the 1991 reforms, the Indian economy saw a drastic change as it opened
gates for foreign companies. It helped in getting funds from abroad; thus, it led
to the growth of merchant banks.
2. ElevatedCompetition :
Because of the globalization of the economy, the market scenarios became
lucrative, and business options became favorable for various individuals. This
pivoted the Indian corporate sector, and a huge expansion was seen in this
sector. This motivated the Merchant Bankers to play an important role by
offering specialized services to corporate.
3. Switch in consumer trends :
There was a huge transformation in the industrial and corporate sectors
because of the foreign players in the market.
The major benefit was that the Indian massed started getting better quality
products as the Indian companies also started working on quality to match the
foreign products. In such prevailing environments, financial products and
instruments became more prominent.

4. Government Reforms :
Government intervention was reduced, and privatization was increased. It also
raised the limits of investment and lessened direct interventions that led to an
increase in the proposition of foreign players. These were some of the causes
that hastened the increase of Merchant Banking in India. Let us also know the
services that merchant banking offers to corporate and big business houses.
 Objectives of Merchant Banks

The different banks had different purposes of establishment, but the merchant banking
in India was started for the following objectives-

 For doing underwriting

 Offering long-term funds to companies
 Portfolio management
 Deciding capital structure
 Off-shore financing
 Corporate Advisory and issue management
 Loan Syndication
 Placement and Distribution

Merchant Bank vs. Commercial Bank

It is paramount to understand the difference between the two banks as it will make it
easier for you to understand the merchant banking in India as compared to the other
banks-

1. Merchant banks work primarily for corporate firms, whereas commercial banks cater
to the needs of individual customers.
2. Merchant Banks are always open to take risks, but commercial banks usually avert
taking any kind of risk.
3. In merchant banks, everyone cannot open an account, whereas commercial banks are
open for everyone.
4. Merchant banks are management-oriented, but commercial banks are asset-oriented.
5. Merchant banks usually do business with equities, but commercial banks usually buy
and sell debt-related finance such as loan approvals, credit proposals, etc.
6. The major activities done by merchant bankers are underwriting, portfolio
management, consultant, and advisor, whereas commercial banks mostly play the role
of financers only.
7. Merchant banks are more related to the primary market and the commercial banks to
the secondary market.
REGISTRATION OF MERCHANT BANKERS

The term ‘merchant baking’ originated in the18th and early 19th

centuries in the united kingdom when trade between countries was financed by bills
of exchange drawn on the principal merchant houses. With the increase in
international trade, thesetablished merchants started the practice of lending their
names to the new comes and accepting the bills of exchange on their behalf. They
would change a commission for the purpose and thus acceptance business become the
hallmark of merchant bankers. Once these banks had gained the confidence of the
government, they also entrusted with the job of issuing bonds in the London market.

Although merchant banking activity ushered in two decades ago.it

was only in 1992, in india after the formation of SEBI that is defined and a set of
rulesand regulations government governing it are in place. In fact the origin of
merchant banking is to be trsced to Italy in late medieval time and france during the
17th and 18th centirires. Merchant banker invested accmulated profits in all kinds of
promising activities. Since they added banking business into the profession of
merchant activities and becomes a merchant bankers. A distinction was existeding
banking systems between moneychanger and exchanger. money changers concentrate
on the mutual exchange of of different currencies, operated locally and later accepted
deposits for security reasons. Passage of timemoney changers evolved in public or
deposit banks banks whereas exchangers, who operated international engaged in bill-
broking that raising foreign exchange and provision of long-term capital for public
borrowers. The exchanges were remittes and merchant bankers. In the 17th century, a
merchant banker was a dealer in bills of exchange who operated with correspondents
abroad and speculated on the rate of exchange. Initially, merchant banks and other
financial institutions. Among all these, institutions it was only banks that accepted
deposits from public.
QULITIES OF GOOD MERCHANT BANKERS

Merchant bankers are individual express who organize and manage the
merchant banks. The oparations of merchant banks are, therefore, influenced by the
pesonality trait of these individuals, for the success of merchant banks operations, the
qualities which merchant bankers should have are :

1. Leadership –
Merchant banker should posses all relevant skills, update knowledge to
interest with the clients and effectively communicate. Leadership is
synonymous with followers who follow the one who leads.

2. Aggressive active -
Aggressive is a personality trait of a good leader but in merchant
banking it has a wider connotation. Aggressive merchant bankers are always
looking for new business. Once a business opportunity has been located. The
merchant banker has got to obtain the mandate for the merchant banking
assignment from the clients at once which will depent upon his own
communication skills, persuasiveness and the background of the organization
to which hebelongs, a good merchant bankers is one who does not allow his
client to think anything ouside except what has been advised.

3. Cooperation and friendness –

These two characteristics are the symbols of good leadership but
it hardly needs to be stressed that cooperation and friendliness coupled wih
persuasiveness are themain instruments with which a merchant banker mixes
with the peoples, gathers information, obtains business mandate and renders
satisfactory services to the clients. Business of an honest business merchant
bankers spreads with geometrical propagation when heshare the thought of his
clients with sympathetic gestures and offers pragmatic suggestions without
greed orfavours. Very often, rude, intemperate and indifferent disposition or
blunt out burst withdrew fortunate business opportunityforever. Friendliness
and coopration must flow as natural traits in the merchant banker to win the
trust of the clients.
 4. Contacts -
Success of merchant banker depends upon his sociable nature and the
richness of wider contacts. A merchant banker is supposed to be acquainted
deeply with all the constituents of merchant banking. The scope of contact
encompasses intimate contiguity and acquaintances within his own
organization central and state government offices where compliances under
various relevant enactments are to be reported. Indian and foreign banks,
financial institutions at central and state level, promoters/directors/owners and
chief executives of the private and public enterprises which would be
prospectives beneficiaries of merchant banking services, printers, advertising
agencies, brokers and stock exchange dealers, advocates and solicitors and
members of the press whose services are availed of in executing merchant
banking assignments. Merchant bankers should widen contacts and references
and continues to maintain them with goodness, honour and homour by
meeting people.

5. Attitude towards problems solving –

The most important personality trait of a merchant banker is his
attitude towards problems solving. Even client coming to him has got to return fully
satisfied having consulted a merchant banker. Positive approach to understand the
view points of others, their difficulties and their adverse circumstances is possible
only when a person is skilled in human relations particularly the inter-personal and
intra-personal behavior. Effective communication and proper feedback are the
prerequisite for creating a positive attitude towards problems solving.
Many persons are effectives in this trait without any training for
reasons of cultivating a habit from environment in which they have been brought up at
home, in school, colleges and office. This is so important that it must be treated as a
separate objective quality of a good merchant banker.


 CHAPTER NO. 2
RESEARCH METHODOLOGY

In the light of the above, the research study has been undertaken to study
about the various modernized services of the banks in the indian banking industry.
This study helps us to know what kind of services the banks offer to their customers.

Research methodology is specific away to solve the research problem.

Research methodology is systematic theorerical analysis of the methods applied to
field of study it includes the various methods, techniques for conduction research. In
short the search for knowledge through objectives and systematic methods of findings
the solution to problem in research. The systemetic approach concerning
generalization and the formulation of a theory is also called research. As such the
term ‘research’ refers to the systematic method consisting of enunciating the
problems, collecting the facts or data, analyzing the fact and reaching certain
conclusion either in the form of solution towards the concerned problems or incertain
generalization for some theoretical formulation.

2.1 what is research ?

The word ‘research’ is derived for the French word ‘researcher’ meaning
to search back. Broadly research to a search for knowledge, research is an attempt to
fine answers to problems both theoretical and practical through the application of
scientific methods. Essentially, research is a systematic enquiry looking for fact
through verificable methods is order to establish the relationship among them and to
conclude from them broad principles and laws.

Research is a continuous process. It helps obtain knowledge about any

natural or human phenomena.
Methodology :
This is a conceptual and descriptive research paper based on secondary
source of data. The data is collected from nation and international journals, published
govt. reports, RBI reports, newpapers, websites etc. secondary research involves
reanalyzing, interreting, or reviewing past data, help in understding what happened
and what happening at present.

2.2 SOURCES OF DATA

Sources of data refers to the techniques or way through which

the data for study is collected. They are primary and secondary data techniques.

A). PRIMARY DATA :

The primary data was collected through questionnaire methods.
Some customers of selected banks were provided with the questionnaire and the
results were interpreted and tabulated.
Questionnaire methods was selected because :
1. They are valid and reliable.
2. They are impersonal, and therefore, people do not hesitate to expree
what they actually feel.
3. Easier to classify and tabulate so what results can be collelated
meaningfully.
4. They are standardized and so eliminated bias to a great extent.

B). SECONDARY DATA

1. Internet
2. Refers the books
3. Refers the magzins newspapers.
4. Gave to advised some knowledgeable people etc.
2.3 STATISTICAL TOOLS

The collected data has been analysed, interpreted and represented, in

forms of pie charts, bar graphs, column charts, etc.

2.4 OBJECTIVES OF STUDY

1. To evaluated the performance of the bank.

2. To fine out the problems faced by the employees.
3. To find out the problems fact by the customers.
4. To analysis customer satisfaction level.

2.5 SCOPE OF THE STUDY

 In the present scenario major economic and technical changes are
undergoing in industrial and financial revolution through the new information
processing technology. Especially, in finance sector it has a signification role for
overall development. After indentifying the subject and referring the relevant
literature, it has been found at in most of the literature, the information technologies
have a wide application area. However, in finance sector major changes have been
made. Due to these drastic changes we have chosen to do the study on urban
cooperative bank system. After completing step by step procedure for automation
process the information. Atomization process , now it is required to take the review of
the system.
People used information technologies tools to manage and process the
information. Automization process use in the financial sector for transaction system.
This type of working, methodology is used in the financial institute since long years.
The urban co-oprative bank sector is mostly related to all classes of people like
agriculture, labour, businessmen, small enterpreneurs, workers, etc. it has been
changing complete culture and working methodology.

2.6 LIMITATION OF THE STUDY

1. Difficulty in collecting due to internal policies and procedure.
2. The study was based on a very small sample size ence cannot
be called as a representation of the views and opinion of the
majority.
3. People were reclucant to go in detail because of their busy
schedules.
4. The study is based on information given by concerned people.
Due to continues change in government policies and banking environment, what is
relevant today may be irrelevant tomorrow.

2.7 SAMPLING METHOD

Meaning of sampling :

The research is the systematic study to examine or investigate the issues

or problems and fine out the relevant information for solution. For study data are to be
collected from the respondent. It is not possible to collect data from every one of the
population. Population is very large number of person or subjects or items which is
not feasible to manage. A population is of group individual from which sample are
taken for measurement. For research purpose a part of the population is to be selected.

Sampling is the process in which a representative part of population for the

purpose of determining parameters of characteristics of the whole population is
selected. This is called the sample. It is easier to contact smaller part of the whole
population for data collection.

Definition of sampling :
The action or process of taking samples of something for analysis.

Sampling size :
In myresearch my sample size 50 respondent of merchant banking in
state bank of india (SBI) customers. So, in that research, I did survey of 30
respondence from online. And 20 respondent in bank.

Sample Area :
My selected area of sample is Ulhasnagar and kalyan.

RESEARCH DESIGN :
 Sample design and size :
Sample is defined as the segment of population that is representive
of whole population. The respondents were selected by convient sampling depending
upon the availability of the respondent. convenient sampling ( sometimes known as
grab or opportunity sampling). Is a type of non- probability sampling which involves
the sample being drawn from a part of the population . which is close to hand it is
based on picking of the individual’s elements as per one’s needs. Sample size is the
number of observations used for calculating estimates of a given population. In this
research project descriptive research design in used judgement and convenience
sampling method is used to get information about customer satisfaction. For
conducting this research a structured questionnaire is prepared and sample of
customers is taken.
HYPOTHESIS :

Introduction :
A hypothesis (plural hypotheses) is a precise, testable statement of what
the researcher(s) predict will be the outcome of the study. It is stated at the start of the
study.
This usually involves proposing a possible relationship between two
variables: the independent variable (what the researcher changes) and the dependent
variable (what the research measures).
In research, there is a convention that the hypothesis is written in two
forms, the null hypothesis, and the alternative hypothesis (called the experimental
hypothesis when the method of investigation is an experiment).
A fundamental requirement of a hypothesis is that is can be tested against
reality, and can then be supported or rejected.
To test a hypothesis the researcher first assumes that there is no difference
between populations from which they are taken. This is known as the null hypothesis.
The research hypothesis is often called the alternative hypothesis.
There are two types of hypothesis
1. Alternative Hypothesis (H1):
The alternative hypothesis states that there is a relationship
between the two variables being studied (one variable has an effect on the other).
An experimental hypothesis predicts what change(s) will
take place in the dependent variable when the independent variable is manipulated.
It states that the results are not due to chance and that they
are significant in terms of supporting the theory being investigated.
The alternative hypothesis is a position that states
sometime is happening, a new theory is true instead of an old one (null hypothesis). It
is usually consistent with the research hypothesis because it is constructed from
literature review, previous studies, etc. however, the research hypothesis is sometimes
constent with the null hypothesis.
In statistics, alternative hypothesis is often denoted as H0 or
H1. Hypothesis are formulated to compare in a statistical hypothesis test.
In the domain of inferential statstics two rival hypothesis can
be compared by explanatory power and predictive power.

2. Null Hypothesis (H0):

The null hypothesis states that there is no relationship
between the two variables being studied (one variable does not affect the other). There
will be no changes in the dependent variable due to the manipulation of the
independent variable.
It states results are due to chance and are not significant in
terms of supporting the being investigated.
The null hypothesis is a type of hypothesis used in statistcs that
proposed that there is no difference between certain characteristics of a population (or
data-generating process). For example, a gambler per play is 0 for both players.
Some examples of hypothesis related to my project topic.

 H0 - the merchant banking services provided by state bank of

india.
 H1 - the merchant banking services provide by the state bank of
india.

 H0 - the people are not aware of merchant banking services

provide by the state bank of india.

 H1 - the people are well aware of merchant banking provide by

the state bank of india.

 H0 - the customers are not satisfied by the merchant banking

services provided by state bank of india.
 H1 - the customers are well satisfied by the merchant banking
services provided by state bank of india.

 H0 - the merchant banking services is not so important in the

modern age.

 H1 - the merchant banking services is too important in the

modern age.

 H0 - people does not invest insecurities and shares.

 H1 - people does invest in securities and shares.

 H0 - investors are not aware of merchant banking.

 H1 - investors are aware of merchant banking.

 H0 - investors does not uses merchant banking facility provide

by financial institutions.

 H1 - investors does uses merchant banking facility provided by

financial institutions.
 CHAPTER NO. 3
REVIEW OF LETRATURE

INTRODUCTION

A literature review is an overview of the previously published works

on a specific topic. The term can refer to a full scholarly paper or a section of a
scholarly work such as a book, or an article. Either way, a literature review is
supposed to provide the researcher/author and the audiences with a general image of
the existing knowledge on the topic under question. A good literature review can
ensure that a proper research question has been asked and a proper theoretical
framework and/or research methodology have been chosen. To be precise, a literature
review serves to situate the current study within the body of the relevant literature and
to provide context for the reader. In such case, the review usually precedes the
methodology and results sections of the work.
A number of studies have been conducted from time to time to understand
the different aspects relating to primary market and merchant banking activities in
India. However, most of them have focused upon the primary market in India only.
Research in the area of merchant banking in India and its role in the primary market is
very limited and that too is descriptive in nature and deals with procedural aspects,
organization and management and marketing aspects of merchant bankers. A review
of important studies is presented below:
A literature review is a piece of academic writing demonstrating knowledge
and understanding of the academic literature on a specific topic placed in context. A
literature review also includes a critical evaluation of the material; this is why it is
called a literature review rather than a literature report.
The purpose of a literature review is to gain an understanding of the existing
research and debates relevant to a particular topic or area of study, and to present that
knowledge in the form of a written report.
Describe the relationship of each work to the others under consideration. Identify
new ways to interpret prior research. Reveal any gaps that exist in the literature.
Resolve conflicts amongst seemingly contradictory previous studies.
1. Verma (1990) –
conducted research on merchant banks in India with the purpose
to analyse their organization structure and management pattern and to assess
their suitability for medium and small size corporate and non corporate
enterprises. The suitability of merchant banking services in reducing investors’
risk and corporate capital structure has also been examined. The information
was collected from a sample of 32 merchant bankers through questionnaire
and the study covered the period 1978 to 1984. The researcher found a number
of weaknesses in the existing ‘divisional form’ organization and management
pattern of merchant banks in India. This included deep concentration of
decision making power, lack of co-ordination, lack of appropriate skill,
inadequate training programme, strict dependence on the bureaucratic
framework, blocked communication channels and misdirected accountability.
The study revealed that 90 percent of the resources of all merchant banks were
devoted only to the management of public issues. A negligible performance of
merchant banks was found in other areas of services including loan
syndication, merger and amalgamation, inter corporate investments and
corporate counselling. Further, merchant banking activities were found to have
remained concentrated with only a few top merchant bankers, while stock
brokers managed very small sized issues covering just 15% of the total amount
of public issues. A good public response was found to the issues managed by
category I merchant bankers including merchant bankers of public sector
banks, whereas the 35 category II merchant bankers which included private
firms had the public response of second order. The researcher highlighted the
merchant banks’ contribution in causing risk reduction both to investors
(through portfolio management) as well as the industry (through project
counseling and corporate counseling). Empirical results also highlighted that
corporate enterprises which sought merchant bankers’ assistance were
financially sounder and less prone to sickness as compared to those not
assisted by the merchant banks.
2. Murthy (1993) -
In his paper examined the cost of raising capital from the public
issues floated during 1992-93. During 1992-93, an amount of Rs. 4677.74
crore was raised through 514 public issues. The estimated expenses on these
issues were Rs. 473 crore. Analysis of 506 public issues showed that issue
expenditure as percentage of net public offer was 10.10% and the proportion
of issue expenses declined with the increase in offer size. The study found that
smaller projects tend to spend a higher proportion as issue expenditure
compared to the larger ones. The researcher also compared the cost of raising
capital of issues through the OTC (over the counter) route and regular stock
exchange option and found that the cost of raising capital through OTC route
was lower than the issues that opted for regular stock exchange route. The
study pointed out that no uniform format existed for reporting the issue
expenditure in the prospectus. The researcher has suggested that the total issue
expenditure as percentage to the total issue amount be reported prominently in
the prospectus and abridged prospectus cum application form.

3. Shah (1995) –
conducted an empirical study on the data set of 2056 Indian IPOs
listed on the BSE from January 1991 to May 1995 with the objective to
examine the under pricing of IPOs and to establish the empirical regularities
about India’s IPO market. He examined six factors underlying under pricing,
namely asymmetric information between firms and investors, fixing the offer
price too early, the interest rate float, loss of liquidity on the amount paid at
issue date (liquidity premium), building loyal shareholders and merchant
bankers rewarding favoured clients as an incentive to under price. Empirical
study found that the average price on first listing day was 105.6% above the
offer size, average delay between issue dates and listing day was 11 weeks 36
and weekly excess return on market index (BSE Sensex) was 3.8%. The study
further found that correlation between the volume of IPOs under pricing and
the return on BSE Sensex was positive, under pricing among the smaller
issues was high, average long run trading frequency of IPO was lower than
‘A’ group companies and return on IPOs during the first 200 trading days was
more than market return.
4. Srivastava (1995) –
In his paper highlighted the need for efficient marketing of public
issues because of the transformation of new issue market from sellers’ market
to buyer dominated market as the geographical and demographical range of
investors has widened. According to him, the process of public issue
marketing starts with the selection of the issue by the merchant banker. Then
the merchant banker plays the role of a guide for the appointment of
underwriters, brokers and an expert advertising agency. The researcher has
listed the current practices in public issue marketing which include the
application of data base marketing research, direct approach to investors ( like
insurance, UTI ), seeking services of marketing experts as issue specialists,
branding the issues like mutual funds, and effective advertising through
extensive and intensive use of media. The author concluded that the future
dimensions of public issue marketing will include the after sale service to
investors and giving instant services of selling. Aggarwal (1995)5 traced the
origin, growth and history of merchant banking in India and abroad. The
objectives of the study included the analysis of organizational structure,
management pattern and performance evaluation of SEBI registered category I
merchant bankers during the period 1989- 90 to 1993-94. The study found that
merchant banking institutions lack skill development programmes for training
the staff, up to date information and more concentration of decision making
power. Despite this, the study highlighted the important role of merchant
bankers in the growth of capital market and mobilization of resources from
public through issue management activities. The author recommended for
stopping the turnover of personnel in merchant banking divisions of
nationalized banks due to transfers, who have up to date market information
and adopt professional attitude for providing services as merchant bankers.
5. Narta (1996) –
Conducted a research study to find out the growth of new issue
market and underwriting of capital issues in India, and to analyse the cost of
raising capital during the period 1970-71 to 1988-89. The study was based on
the secondary data. 37 The researcher found that after independence, a large
number of public financial institutions, investment institutions, merchant
banking divisions of commercial banks and investment consultancy agencies
were engaged in the underwriting operations of capital issues in India. The
researcher found that public financial institutions accounted for a larger
proportion in underwriting activities though their share declined from 63% in
1970- 71 to 22.64 % in 1986-87. The commercial banks showed an increase in
underwriting activities on account of opening of merchant banking divisions.
Development banks and GIC were found to prefer participation in the
underwriting of large issues. Stock brokers were more active in underwriting
during boom conditions while commercial banks were more selective to
underwrite the issues of their valued customers. The average cost of public
issues during the period of study was found to be ranging from 8% to 10% of
the amount offered to public. However, the cost of issues of existing
companies was higher as compared to IPOs because of aggressive campaign
for over subscription.

6. Aggarwal (1995) –
Traced the origin, growth and history of merchant banking
in India and abroad. The objectives of the study included the analysis of
organizational structure, management pattern and performance evaluation of
SEBI registered category I merchant bankers during the period 1989- 90 to
1993-94. The study found that merchant banking institutions lack skill
development programmes for training the staff, up to date information and
more concentration of decision making power. Despite this, the study
highlighted the important role of merchant bankers in the growth of capital
market and mobilization of resources from public through issue management
activities. The author recommended for stopping the turnover of personnel in
merchant banking divisions of nationalized banks due to transfers, who have
up to date market information and adopt professional attitude for providing
services as merchant bankers.
7. Kailani (1998) –
In her research work examined the marketing strategies and
performance of merchant bankers during the period 1990-91 to 1997-98. The
study was based upon 77 merchant bankers. The researcher evaluated the
performance of merchant bankers by taking into account of both qualitative
and quantitative dimensions. While qualitative factors included skill in issue
management and quality of personnel and services to the clients, the
quantitative factors included number and amount of public issue handled and
the activity profile of merchant bankers (fund based or non fund based). The
variables taken for quantitative evaluation included projected and actual sales,
profit before interest, depreciation and taxes, profit after tax and earnings per
share. The study found that the role of merchant bankers had become more
diverse after the setting up of SEBI. Post liberalization era up to 1995 saw a
number of small financial companies entering into merchant banking business
because of low entry barriers. Consequently, bad quality issues were sold in
large numbers. Further, high 38 concentration of merchant banking business
was found among the top ten merchant bankers and only six merchant bankers
provided all the post issue services. The author recommended for fixing the
responsibility for fulfillment of promises made in the prospectus, improving
the quality of disclosures in IPOs, need for grading the prospectus, mandatory
participation of merchant bankers in the project and rating of merchant
bankers.

8. Qumar (1998) –
Analyzed the non fund based financial services by the leading
public sector banks (PSBs) in the field of merchant banking for the period
1993-94 to 1997- 98. According to the author, the public sector banks entered
in merchant banking business on the recommendations of Banking
Commission 1972 and dilution of foreign equity of large number of foreign
companies operating in India. He analyzed the role played by public sector
banks in handling the number and amount of issues as lead manager, co
manager, underwriter, adviser, banker to issue and the project appraiser. The
author concluded that there should be reforms in the existing legal system
relating to financial services of PSBs, as frequent changes in guidelines had
adversely affected the financial services of PSBs. The author pointed out that
limited range of merchant banking activities, inferior quality of services and
lack of trained and skilled personnel were the reasons for declining trend in
the merchant banking business with public sector banks and suggested a close
touch with the economy and developments in capital market and more
competitive and technical bank officers for improvement in the merchant
banking services by banks.
 9. Dr. R.L. Hydrabad and DR. SO. HALASAGI (2004) :
In their study that the merchant bankers primary function is
to assist the corporate the in mobilizing financial resources. This is the activity and
they are expected to generate core competency in this particular activity. However,

10. K.C.Gupta and Joginder (2008) :

Merchant banking is an important services provided by a
number of financial institutions that helps in the growth of the corporate sector
which ultimately reflects into the overall economic development of the
century. Merchant banks were expected to perform several functions like issue
management, underwriting, portfolio management, loan sundication,
consultant, advisor and host of other activities. SEBI was also made all power
full to regulate the activities of merchant banking was the necessity of banks
themselves which were in need of non-fund based income so as to improve
their profitability margins by all means in the changed economic scenario.

11. Sankar De and sushil Khanna (1994) :

This study examines the economic and financial implications of
some of the regulations introduced by the new securities board of india (SEBI)
through the guidelines it has periodically issued. The regulations apply to
investment or merchant banking services required for corporate issues of long
term securities in india. The authors find that some implications of the
guidelines may be in conflict with the professed objective of the current
economic policy.
 12. Bruce W. Barren (EMCO/Hanover Group) (2006) :
In their study merchant banker acted as a capital sources
whose primary activity was involved in the buying, selling and shipping of goods.
The role of the had merchant banker, who has the expertise to understand a particular
transaction, was to arrange the necessary capital and ensure that the transaction would
ultimately produce “collectable profits”. Often, the merchant banker also become in
the actual negotiations between a buyer and seller in a transaction.

13. Waghmare Shivaji (2015):

Globalization made whole Indian economy open which
features a multiple role within the financial services. Now a day’s government
open the door of investment within the area of insurance and bank. which give
competitive environment for present player? Merchant banking is an
innovative term introduced by full-service bank. The necessity for the
merchant banking is pronounced by banking commission (1972). Merchant
banking offer feebased and non-fee-based services like loan syndication,
underwriting, project promotion, advisory to small and medium savers. In
India merchant banking work under SEBI.

14. Dr. Jyoti Lahoti (2016):

Merchant banking is service provided by financial organization
which helps within the economic development of the country. Merchant
banking provides various services like portfolio management, loan
syndication, and issue management. Merchant banking may be a combination
of consultancy services and banking. It helps within the business unit. It also
helps to extend the fund and to expand the business.

15. Dr. Singh and Dr. Saxena (2017):

Merchant banking consists of wide selection of monetary
activities and financial organization acquirer called “Accept and issue house”.
Because merchant banking acting as broker and principle. Merchant banking
features a long- term approach concerned with each investment opportunity
and provides right advice to every client of the corporate. Merchant banking
may be a service provided by many financial institutions to extend growth of
corporate sector which reflect into Indian economy. Merchant banking may be
a combination of consultancy services and banking.
16. CS Gowtham (2017):
Merchant banking issue share, debentures, loan to their
clients. This finance is employed for brand spanking new business or to
expand the business, to switch the business. Merchant banking not only
provides finance but also provide right path with reference to SEBI. Shreyas
B.S: Merchant banking contains wide selection of monetary activities.
acquirer is named “Accepting and issuing house” Merchant banking is rapidly
growing in Indian economy. The SEBI which provides overall view of present
and past. Merchant banking is oldest within the primary market and its bright
future in coming years

17. Anand (2002) –

others in their research paper studied the long term relationship
between business firms and investment banks with the premise that it leads to
better allocation of resources in the economy. The objective of the paper was
to study the conditions that must be met for sustaining relationships between
the investment banking and the security market. The paper stated that the
investment banking structure was determined by the technology of
relationships. The author developed a model of this relationship with the
assumption that investment bank must incur a sunk cost to establish this
relationship. The author also discussed the policy implications to develop this
relationship as the size-distribution of business firm depended heavily on the
structural characteristics of the economy. While policy can probably remove
obstacles that increase the cost of relationships, the size distribution of
business firms determined whether an investment banking industry was
feasible: it will not emerge if large firms are few.

18. Joint Parliament Committee (2002) –

which was set up to look into the manipulation and
irregularities in the securities market, as a result of Ketan Parekh scam,
submitted its Action Taken Report (ATR) on December 19, 2002. The JPC has
made 276 observations/ conclusions/ recommendations. Each of the
observation has been listed in the report along with the response of the
Government. The Committee in its report held the stock exchange authorities,
SEBI, RBI, Department of company Affairs (DCA) and Finance Ministry
responsible for the stock market scam. The report criticized SEBI for its
failure to monitor and regulate the securities market, for its lack of action in
case of mismatch between movements in the primary and secondary market,
the absence of regulatory framework for the private placement to the detriment
of the primary market and negligence in checking whether bull operators
obtained bank funds to finance their market operations. SEBI’s track record of
punishing wrong doers was found unsatisfactory by the JPC.