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A system that aims at establishing and providing a regular, efficient and cost effective linkage between depositors and investors is known as Financial System.
Flow of funds(Saving)

Seekers of Funds (mainly business firm and government)

Flow of financial Services

Suppliers of funds (mainly households)

Features of Financial System It provide linkage between depositors and investors. It facilitate expansion of financial market It promotes efficient allocation of financial resources It influences both quality and the pace of economic development

An overview of Indian Financial System:

Financial Markets

Financial Institution

Financial Financial Instruments Services

Financial Markets: It is a place where financial assets are created or transferred. (i)Money Market (ii) Capital Market (iii) Government Securities Market (iv) Foreign Exchange Market.

(i)Money Market: The money market is a wholesale debt market for low-risk, highly-liquid, short-term instrument. I t consists of following sub-markets: 1. Call money market 2. Bill market. 3. Short-term government securities. 4. Collateral loan market. (ii)Capital Market: => The capital market is designed to finance the longterm investments. => The capital market deals with new issue and transfer of existing securities.

Capital market
Capital Market in India

Government security (Gilledged market)

Industrial security market

Development financial Institution

Financial Intermediaries

New issues market and Old issue market

IFCI ICICI SFCs IDBI IIBI UTI Merchant banks Mutual funds Leasing companies

Venture capitalist

(iii) Government Securities Market It is a market where government securities are traded. (iv) Foreign Exchange Market: Purchase and sale of national currencies. The Forex market deals with the multicurrency requirements, which are met by the exchange of currencies. Depending on the exchange rate that is applicable, the transfer of funds takes place in this market. This is one of the most developed and integrated market across the globe.

Most Traded currencies April 2011

Most Traded Currencies

April 2011. 84.9%

19.0% 12.9% 6.4% 7.6% 5.3% 2.2% 2.4% 1.3% 1.6% 1.3%


Traded only 0.9% during April 2011

Financial Institution: => Institution that provide credit and credit related services are called financial institution. => Financial institutions are the intermediaries who facilitates smooth functioning of the financial system by making investors and borrowers meet. They mobilize savings of the surplus units and allocate them in productive activities promising a better rate of return. Functions: => Collecting deposits and lend loan to trade. Examples: NABARD, EXIM bank, IDBI, etc.,

Structure of Banking in India

Scheduled bank

Commercial bank

Co-operative bank

Public sector (27)

Private sector (30)

Foreign banks (40)

Regional Rural banks (196)

Nationalized banks (19)

State bank of India & its associates (8)

Characteristics of Financial Institutions 1. Saving Mobilizer 2. Participants 3. Dealers 4. Generators 5. Regulation 6. Types 7. Special institutions

Financial Services: => It is concerned with the design and delivery of advice and financial products to individual and businesses. => This service is regulated by SEBI, RBI, Government of India. It comprise of various functions and services that provide by the financial institutions in a financial system. Services are: Leasing, Hire Purchasing, Factoring, Forfeiting, Mutual Fund, Bill discounting, Credit cards, underwriting, Brokerage, Portfolio Management, Housing Finance, etc.,

Financial Instrument: Financial instrument in the Indian financial system may be categorized into (i)Money market instrument: => Treasury Bill => Bill of Exchange. => Commercial paper => Certificate of deposits (ii) Capital market instrument: => Equity shares => Preference Shares. => Different type of debentures.

Merchant bankers as lead managers 1 2 Size of the issue Less than 50 crores 50 100 crores Maximum number of lead managers 2 3

4 5

100 200 crores

200 400 crores Above 400 crores

5 5 or more as prescribed by SEBI

Merchant Banking
Definition :

In banking, a merchant bank is a financial institution primarily engaged in offering financial services and advice to corporations and wealthy individuals on how to use their money. According to Cox, D. merchant banking is defined as, merchant banks are the financial institutions providing specialist services which generally include the acceptance of bills of exchange, corporate finance, portfolio management and other banking services.

Merchant Banking in India

Till early 1960s there was no merchant banking in the Indian banking system. It was the Grindlays Bank which started merchant banking services as far back as 1967 in India. Others to follow were Citibank (1970), SBI (1972) The boom in the capital market in mid 1970s with the introduction of FERA 1973 encouraged other banks and financial institutions to set up MB divisions. => In 1973, SBI started the merchant banking and it was followed by ICICI.

=>Private financial brokers also started private MB organizations => Between 1974 and 1985, the merchant banker has promoted lot of companies. => However they were brought under the control of SEBI in 1992

Merchant Banking in IndiaInstitutional Structure

Merchant Banking Divisions

Foreign Banks

Indian Banks

Financial Institutions

Private Merchant Bankers


Division in Bank

Recent Developments in Merchant Banking

=> The Merchant Banking was at its best during 1985-1992 being when there were many new issues. It is expected that 2010 that it is going to be party time for merchant banks, as many new issue are coming up. => The foreign investors both in the form of portfolio investment and through foreign direct investments are venturing in Indian Economy. It is increasing the scope of merchant bankers in many ways. => Disinvestment in the government sector in the country gives a big scope to the merchant banks to function as consultants. New financial instruments are introduced in the market time and again. This basically provides more and more opportunity to the merchant banks. The mergers and corporate restructuring along with MOU and MOA are giving immense opportunity to the merchant bankers for consultancy jobs.

Challenges faced by Merchant Banker in India 1. SEBI guideline has restricted their operations to Issue Management and Portfolio Management to some extent. So, the scope of work is limited. 2. In efficiency of the clients are often blamed on to the merchant banks, so they are into trouble without any fault of their own. 3. The net worth requirement is very high in categories I and II specially, so many professionally experienced person/ organizations cannot come into the picture. 4. Poor New issues market in India is drying up the business of the merchant bankers. Thus the merchant bankers are those financial intermediary involved with the activity of transferring capital funds to those borrowers who are interested in borrowing.

Functions of Merchant Banking (i) Corporate counseling: Corporate counseling covers counseling in the form of project counseling, capital restructuring, project management, public issue management, loan syndication, working capital fixed deposit, lease financing, acceptance credit etc., The scope of corporate counseling is limited to giving suggestions and opinions to the client and help taking actions to solve their problems. (ii) Project counseling Project counseling is a part of corporate counseling and relates to project finance. It broadly covers the study of the project, offering advisory assistance on the viability and procedural steps for its implementation.

(iii)Capital Structure

Here the Capital Structure is worked out i.e., the capital required, raising of the capital, debt-equity ratio, working capital requirements, etc., (iv)Portfolio Management It refers to the effective management of Securities i.e., the merchant banker helps the investor in matters pertaining to investment decisions. Taxation and inflation are taken into account while advising on investment in different securities. Investments are done in such a way that it ensures maximum returns and minimum risks. (v) Issue Management Management of issues refers to effective marketing of corporate securities viz., equity shares, preference shares and debentures or bonds by offering them to public.

(vi) Credit Syndication Credit Syndication refers to obtaining of loans from single development finance institution or a syndicate or consortium. Merchant Banks help corporate clients to raise syndicated loans from commercials banks. (vii) Working Capital The Companies are given Working Capital finance, depending upon their earning capacities in relation to the interest rate prevailing in the market. (viii)Venture Capital Venture Capital is a kind of capital requirement which carries more risks and hence only few institutions come forward to finance. The merchant banker looks in to the technical competency of the entrepreneur for venture capital finance. (ix)Fixed Deposit Merchant bankers assist the companies to raise finance by way of fixed deposits from the public.

(x)Other Functions Treasury Management- Management of short term fund requirements by client companies. Stock broking- helping the investors through a network of service units Servicing of issues Small Scale industry counseling- counseling SSI units on marketing and finance Equity research and investment counseling Assistance to NRI investors - the NRI investors are brought to the notice of the various investment opportunities in the country. Foreign Collaboration


SEBI Regulations on merchant bankers I. Registration of Merchant Bankers A. Application for Grant of Certificate An application by a person for grant of a certificate shall be made to the Board in Form A. The application shall be made for any one of the following categories : Category I- To carry on any activity of the issue management Category II- To act as adviser, consultant, co-manager, underwriter, portfolio manager Category III- To act as underwriter, adviser, consultant to an issue. Category IV- To act only as adviser or consultant to an issue With effect from 9th December, 1997, an application can be made only for carrying on the activities mentioned in category I.

B. Conformance to Requirements: Subject to the provisions of the regulations, any application, which not complete in all respects and does not conform to the instructions specified in the form, shall be rejected. C. Furnishing of Information: The Board may require the applicant to furnish further information or clarification regarding matter relevant to the activity of a merchant banker for the purpose of disposal of the application. D. Consideration of Application: The Board shall take into account for considering the grant of a certificate , applicant complies with the following requirements: That the applicant shall be a body corporate act as Primary or Satellite Dealer That the applicant has the necessary infrastructure employment minimum of two persons who have the experience to conduct the business of the merchant banker

That the applicant fulfils the capital adequacy as specified principal officer is not involved in any litigation connected with the securities market officer has not at any time been convicted for any offence That the applicant has the professional qualification That the applicant is a fit and proper person That the grant of certificate to the applicant is in the interest of investors. E. Capital Adequacy Requirement Category Minimum Amount Category I Rs.5,00,00,000 Category II Rs.50,00,000 Category III Rs.20,00,000 Category IV Nil

F. Procedure for Registration: The Board on being satisfied that the applicant is eligible shall grant a certificate in Form B. On the grant of a certificate the applicant shall be liable to pay the fees in accordance with Schedule II. G. Renewal of Certificate: Three months before expiry of the period of certificate, the merchant banker, may if he so desired, make an application for renewal in Form A. The application for renewal shall be dealt with in the same manner as if it were a fresh application for grant of a certificate H. Procedure where Registration is not Granted The refusal to grant registration shall be communicated by the Board within thirty days of such refusal to the applicant stating therein the grounds on which the application has been rejected. Any applicant may, apply within a period of thirty days from the date of receipt of such intimation to the Board for reconsideration for its decision.

I. Effect of Refusal to Grant Certificate: Any merchant banker whose application for a certificate has been refused by the Board can cease to carry on any activity as merchant banker. J. Payment of Fees: Every applicant eligible for grant of a certificate shall pay such fees in such manner and within the period specified in Schedule II. Where a merchant banker fails to any annual fees as the Board may suspend the registration certificate .

General Obligations. A. Sole Function 1. Merchant Banker not to associate with any business other that that of the securities market. 2. No merchant banker, other than a bank or a public financial institution, who has been granted certificate of registration under these regulations, shall after June 30th, 1998 carry on any business other than that in the securities market. B. Maintenance of Books 1. A copy of balance sheet as at the end of each accounting period; 2. A copy of profit and loss account for that period; 3. A copy of the auditors report on the accounts for that period; and 4. A statement of financial position

C. Submission of Half-yearly Results Every merchant banker shall furnish to the Board half-yearly unaudited financial results when required by the Board with a view to monitor the capital adequacy of the merchant banker. D. Preservation of Books of Account, Records, etc., The merchant banker shall preserve the books of accounts and other records and documents maintained under regulation 14 for a minimum period of five years. E. Report on Steps taken on Auditor's Report Every merchant banker shall within two months from the date of the auditors report take steps to rectify the deficiencies, made out in the auditors report. F. Appointment of Lead Merchant Bankers All issues should be managed by at least one merchant banker functioning as the lead merchant banker

G. Restriction on Appointment of Lead Managers The number of lead merchant bankers may not, exceed in case of any issue of the following: Size of Issue Number of Merchant Bankers Less than Rs. 50 Crores Two Above Rs. 50 Crores but less than Rs.100 Crores Three Above Rs. 100 Crores but less that Rs.200 Crores Four Above Rs.200 Crores but less that Rs.400 Crores Five Above Rs.400 Crores Five or more as agreed by SEBI H. Responsibilities of Lead Managers Specifying such responsibilities is furnished to the Board at least one month before the opening of the issue for subscription


Underwriting Obligations In respect of every issue to be managed, the lead merchant banker holding a certificate under Category I shall accept a minimum Underwriting obligation of five percent of the total underwriting commitment or rupees twenty-five lakhs whichever is less. J. Submission of Due Diligence Certificate shall submit to the Board at least two weeks prior to the opening of the issue for subscription, a due diligence certificate in Form C. K. Documents to be furnished to the Board 1. Particulars of the issue; 2. Draft prospectus or where there is an offer to the existing shareholders, the draft letter of offer; 3. Any other literature intended to be circulated to the investors, including the shareholders; and 4. Such other documents relating to prospectus or letter of offer as the case may be.

L. Payment of fees to the Board The draft prospectus or draft letter of offer referred to in regulation 24 shall be submitted along with such fees and in such manner as may be specified in Schedule IV. M. Continuance of Association of Lead Manager The lead manager undertaking the responsibility for refunds or allotment of securities in respect of any issue shall continue to be associated with the issues till the subscriber have received the share or debenture certificates or refund of excess application money. N. Acquisition of shares Prohibited Relative enter into transaction in securities of bodies corporate on the basis of unpublished price sensitive information obtained by them during the course of any professional assignment either from the clients or otherwise

O. Information to the Board Every merchant banker shall submit to the Board complete particulars of any transaction for acquisition of securities of any body corporate whose issue is being managed by that merchant banker within fifteen days from the date of entering into such transaction. P. Disclosures to the Board 1. His responsibilities with regard to the management of the issue; 2. The names of the body corporate whose issues he has managed or has been associated with; 3. The particulars relating to breach of the capital adequacy requirement as specified in regulation 7; 4. Relating to his activities as a manager, underwriter, consultant or adviser to an issue as the case may be.

Q. Appointment of Compliance Officer Every merchant banker shall appoint a compliance officer who shall be responsible for monitoring the compliance of the Act, rules and regulations notifications, guidelines, instructions etc., issued by the board or the Central Government and for redressed of investors grievances.

II. Procedure For Inspection A. Board's Right to inspect The Board may appoint one or more persons as inspecting authority to undertake inspection of the books of accounts, records and documents of the merchant banker 1. To ensure that the books of account are being maintained in the manner required; 2. To ensure that the provisions of the Act, rules, regulations are being complied with; 3. To investigate into the complaints received from investors, 4. Investors interest in the affairs of the merchant banker. B. Notice before inspection Before undertaking an inspection under regulation 29 the Board shall give a reasonable notice to the merchant banker for that purpose.

C. Obligations of Merchant Banker on Inspection It shall be the duty of every director, proprietor, partner, officer and employee of the merchant banker, who is being inspected, to produce to the inspecting authority such books, accounts and other documents in his custody or control and furnish him with the statements and information relating to his activities. D. Submission of Report to the Board The inspecting authority shall, as soon as possible submit, an inspection report to the Board. E. Action on Inspection or Investigation Report The Board of the Chairman shall after consideration of inspection or investigation report take such action and the board or chairman may deem fit and appropriate including action under the Securities and Exchange Board of India Regulations, 2002.

F. Appointment of Auditor The Board may appoint a qualified auditor to investigate into the books of account or the affairs of the merchant banker. G. Communication of findings The Board shall after consideration of the inspection report communicate the findings to the merchant banker to give him an opportunity of being heard before any action is taken by the Board on the findings of the inspecting authority .

III. Procedure For Action Incase Of Default A. Liability for Action in case of Default A merchant banker who fails to comply with any conditions subject to which certificate has been granted, and contravenes any of the provisions of the Act rules or regulations shall be dealt with in the manner provided under the Securities and Exchange Board of India Regulations, 2002. B. Suspension of Registration A penalty for suspension of registration of a merchant banker may be imposed under the following circumstances: violates the provisions fails to furnish any information fails to resolve the complaints indulges in manipulation guilty of misconduct fails to maintain

fails to pay the fees; violates the conditions does not carry out his obligations C. Cancellation or Registration A penalty of cancellation of registration of a merchant banker may be imposed where; indulges in deliberate manipulation financial position deteriorates guilty of fraud repeated defaults D. Manner of Making Order of Suspension or Cancellation No order of penalty of suspension or cancellations the case may be shall be imposed except after holding an enquiry in accordance with procedure specified in regulation.

E. Manner of Holding Enquiry before Suspension or Cancellation. For the purpose of holding an enquiry under regulation 38, the board may appoint an enquiry officer . The enquiry officer shall issue to the merchant banker a notice the registered office or the principal place of business of the merchant banker. The merchant banker may, within thirty days from the date of receipt of such notice furnish to the enquiry officer a reply together with copies of documentary or other evidence relied on by him or sought by the Board from the merchant banker. F. Show case Notice and Order On receipt of the report from the enquiry officer, the Board shall consider the same and issue a show-cause notice as to why the penalty as proposed by the enquiry officer should not be imposed. The merchant banker shall within twenty-one days of the date of the receipt of the show-cause send a reply to the Board.

G. Effect of Suspension and Cancellation On and from the date of the suspension of their merchant banker he shall cease to carry on any activity as a merchant banker during the period of suspension. H. Appeal to the Securities Appellate Tribunal Any person aggrieved by an order of the board may, on and after the commencement of the /securities Laws (second amendment) Act, 1999, under these regulations may prefer an appeal to a Securities Appellate Tribunal having jurisdiction in the matter. I. Fees Every merchant banker shall pay a sum of Rupees five lacs as registration fees at the time of the grant of certificate by the Board .

Every Merchant banker shall pay registration fees as set out below : 1. Category I; A sum of Rs. 2.5 lakhs to be paid annually for the first two years , third year a sum of Rs. 1 lakh 2. Category II ; A sum of Rs. 1.5 lakhs to be paid annually for the first two years , third year a sum of Rs. 50,000 3. Category III; A sum of Rs.1 lakh to be paid annually for the first two years, third year a sum of Rs.25,000 4. Category IV; A sum of Rs.5,000/- to be paid annually for the first two years , third year a sum of Rs.1000/Renewal Fees : 1. Category I : A sum of Rs.1 lakh to be paid annually for the first two years, third year a sum of Rs.20,000/2. Category II: A sum of Rs.75,000/- to be paid annually for the first two years, third year a sum of Rs.10,000/-

3. Category III : A sum of s.50,000/ to be paid annually for the first two years, third year a sum of Rs.5,000/4. Category IV: A sum of Rs.5,000/- to be paid annually for the first two years, third year a sum of Rs.2,500/-

IV. CODE OF CONDUCT FOR MERCHANT BANKERS The SEBI regulations have outlined the following code of conduct for the merchant bankers operation in India ; protect the interests of investors High standards of integrity Prompt, ethical Due Diligence Grievances of investors are redressed Adequate disclosure True and adequate information Copies of the prospectus Shall not discriminate among its clients Misrepresent the service Avoid conflict of interest Resolve any conflict

Appropriate disclosure Best possible advice Shall not divulge Shall not indulge in any unfair competition Maintain arms length relationships Internal control procedures Shall not make untrue statement Maintain an appropriate level of knowledge Board is promptly informed Any investment advice Demarcate the responsibility Provide adequate freedom Own internal code of conduct Good corporate policies Business is fit and proper

Adequate resources Responsible for the acts and omission Relevant information Shall not be a party

Provision relating to Companies Act The various regulations which govern the merchant bankers on the capital issue are prescribed by the companies act, and the other enactments mentioned below: 1. Provisions of the Companies Act, 1956 a. Prospectus (Sec. 55 to 68A) b. Allotment (Sec. 55 to 75) c. Commissions and discounts (Sec. 76 & 77) d. Issue of shares at premium and at discount (Sec. 78 & 79) e. Issue and redemption of preference shares (Sec. 80 & 80A) f. further issues of capital (Sec. 81) g. Nature, numbering and certificate of shares (Sec. 82 to 84) h. Kinds of share capital and prohibition on issue of any other kind of shares (Sec. 85 & 86) i. Matters to be specified in prospectus and reports to be set out therein (Schedule 11)

2. The Securities Contracts (Regulations) Act, 1957 regarding transactions in securities 3. The Securities Contracts (Regulation)Rules, 1957. 4. Adequacy and quality of personnel employed by them and also the available infrastructure.

SEBI Guidelines
Operational Guidelines SEBI has pronounced the following guidelines for merchant bankers 1. Submission of offer document : The offer documents of issue size up to Rs. 20 crores shall be filed by lead merchant bankers with the concerned regional office of the Board under the jurisdiction of which the registered office of the issuer company falls. The lead merchant banker shall make available 10 copies of the draft offer document to the Board and 25 copies to the stock exchange(s) where the issue is proposed to be listed. The lead merchant banker and the Stock Ex change(s) may charge a reasonable charge for providing a copy of the draft offer document.

The lead merchant banker shall also submit to the Board to draft offer document on a computer floppy in the format specified in Schedule XXIII. The Lead Merchant Banker shall submit two copies of the printed copy of the final offer document to dealing offices of the Board within three days of filing offer document with Registrar of companies/concerned Stock Exchange(s) as the case may be. Wherever offer documents (for public/rights issues, takeovers or for any other purpose) are filed with any Department/Office of the Board, the following details certified as correct shall be given by the lead merchant banker in the forwarding letters: a. Registration number b. Date of registration/Renewal of registration c. Date of expiry of registration d. If applied for renewal, date of application e. Any communication from the Board prohibiting them from acting as a merchant banker

f. Any inquiry/investigation being conducted by the Board g. Period up to which registration/renewal fees has been paid h. Whether any promoter/group and/or associate company of the issuer company is associated with securities-related business and registered with SEBI i. If any one or more of these persons/entities are registered with SEBI, their respective registration numbers j. If registration has expired, reasons for non-renewal k. Details of any enquiry/investigation conducted by SEBI at any time l. Penalty imposed by SEBI m. Outstanding fees payable to SEBI by these entities, if any

2. Dispatch of issue material : Lead merchant bankers shall ensure that whenever there is a reservation for NRIs, 10 copies of the prospectus together with 1000 application forms are dispatched in advance of the issue opening date, directly along with a letter addressed in person to Adviser (NRI), Indian Investment Centre, Jeevan Vihar Building Sansad Marg, New Delhi. Twenty copies of the prospectus and application forms shall be dispatched in advance of the issue opening date to the various Investors Associations. 3. Underwriting While selecting underwriters and finalizing underwriting arrangement, lead merchant bankers shall ensure that the underwriters do not overexpose themselves so that it becomes difficult to fulfill their underwriting commitments.

4. Compliance obligations The merchant banker shall ensure compliance with the following post-issue obligations a. Association of resource personnel : In case of over-subscription in public issues, a Board nominated public representative shall be associated in the process of finalization of the basis of allotment. Honorarium at a minimum of Rs.500/- per day, plus normal conveyance charges shall be paid to them. b. Redressal of investor grievances The merchant bankers shall assign high priority to investor grievances, and take all preventive steps to minimize the number of complaints. The lead merchant banker shall set up a proper grievance monitoring and redressal system in co-ordination with the issuers and the Registrars to Issue.

c. Submission of post issue monitoring reports The concerned lead merchant banker shall submit, in duplicate, the Post Issue Monitoring Reports specified in Clause 7.2 of Chapter VII of these Guidelines, within 3 working days from the due dates. d. Issue of No objection Certificate (NOC) In accordance with the Listing Agreement of the Stock Exchanges, the issuer companies shall deposit 1% of the amount of securities offered to the public These securities can be related by the concerned Stock Exchange only after obtaining an NOC from the Board e. Registration of merchant bankers Application for renewal of Certificate of Registration shall be made by the merchant bankers according to Regulation 9 of SEBI Rules and Regulations, 1992. While filing the renewal application for the certificate of registration as merchant banker, it shall provide a statement highlighting the changes that have taken place

f. Reporting requirements In terms of Regulation 28 of SEBI (Merchant Bankers Regulation) 1992, the merchant bankers shall send a half yearly report, in the format specified in Schedule XXVII, relating to their merchant banking activities. g. Impositions of penalty points Penalty points may be imposed on the merchant banker for violation of any of the provisions for operational guidelines.

Guidelines on Advertisement 1. Factual and truthful An issue advertisement shall be truthful, fair and clear, and shall not contain any statement that is untrue or misleading. Any advertisement reproducing, or purporting to reproduce, any information contained in an offer document shall reproduce such information in full and disclose all relevant facts 2. Clear and concise An advertisement shall be set forth in a clear, concise and understandable language. Extensive use of technical, legal terminology or complex language and the inclusion of excessive details, which may distract the investor, shall be avoided. 3. Promise or profits An issue advertisement shall not contain statements which promise or guarantee rapid increase in profits.

4. Mode of advertising No models, celebrities, fictional characters, landmarks, caricatures or the likes shall be displayed on or form part of the offer documents or issue advertisements. Issue advertisements shall not appear in the form of crawlers on television. 5. Financial data If any advertisement carries any financial data, it shall also contain data for the past three years and shall include particulars relating to sales, gross profit, not profit, share capital, reserves, earnings per share, dividends, and book values. 6. Risk factors All issue advertisements carried in the print media such as newspapers, magazines, brochures or, pamphlets shall contain highlights relating to any issue, besides containing detailed information on the risk factors. The print size of highlights and risk factors in issue advertisements shall not be less than point 7 size.

7. Issue date No corporate advertisement of issuer company shall be issued after 21 days of filing of the offer document with the Board until the closure of the issue, unless the risk factors which are required to be mentioned in the offer document, are mentioned in the advertisement. 8. Product advertisement No product advertisement of the company shall contain any reference, directly or indirectly, to the performance of the company during the period. 9. Subscription No advertisement shall be issued stating that the issue has been fully subscribed or oversubscribed during the period the issue is open for subscription

10. Issue closure No announcement regarding closure of the issue shall be made except on the closing date. 11. Incentives No incentives, apart from the permissible underwriting commission and brokerage, shall be offered through advertisements to anyone associated with marketing the issue. 12. Reservation In case there is a reservation for NRIs, the issue advertisement shall specify the same, and also indicate the place in India from where the individual NRI applicant can procure application forms. 13. Undertaking An undertaking has to be obtained from the issuer as part of the MOU between the lead merchant banker and the issue company to the effect that the issuer company shall not directly or indirectly release

14. Availability of copies Ensure the availability of copies of all issue related materials with the lead merchant banker, at least until the allotment is completed. hant-banking# - c this to for 2nd unit