Merchant banking

Merchant Banking

GROUP MEMBERSNAME ROLL NOS

AKASH JAIN 16

AMBER JAIN 17

ANKIT JAIN 18

ARCHANA JAIN 19

AASHIT JAIN 20

Introduction

According to SEBI Merchant Bankers rules 1992 & The Notification of the Ministry of Finance the

merchant banker is :-

“Any person who is engaged in the business of issue management either by making

arrangements regarding selling, buying or subscribing to securities as manager-consultant, advisor or rendering corporate advisory services

in relation to such issue management”

History

Merchant banking started in Italy in late medieval times

Reached in France during the seventeenth century

Italian merchant bankers introduced Merchant banking into England in eighteenth century

European bankers developed merchant banking In USA

In 1972, merchant banking started in South Africa

In 1967, National Grindlays Bank started merchant banking in India

HISTORY AND ORIGIN OF MERCHANT BANKING IN INDIA

Origin

Merchant banking in India historical perspective

Merchant Banking In India

Foreign bank National Grindlays Bank started merchant banking in 1967

Then Citibank in1970 & State Bank of India in 1972 started merchant banking

Later ICICI set up its merchant Banking Division followed by Bank of India, Bank of Baroda, Canara Bank etc..

Main Services Provided By Merchant Banks

Corporate Counselling

Project Counselling

Loan Syndication

Managers to Issue

Underwriting

Portfolio Management

Non-Resident Investment

Advising On Mergers And Take-Over

Arranging Offshore Finance

Management of Debenture Issue

Assistance in issue of ADR/GDR

Main Services Provided By Merchant Banks

Particular Summary

Corporate

Counselling

Covers the entire field of merchant banking , of giving suggestions

Project

Counselling

Preparing project report for govt. Approval , financial assistance

Loan SyndicationAssistance rendered to get term loan for project,

help client make appraisal, designing capital structure etc

Managers to IssueDrafting, completion of formalities, appoint

Registrar etc

UnderwritingGuarantee given by the underwriter, make raising

of external resource easy

Portfolio

ManagementInvestment in different kind of securities

Non-Resident

Investment

Provide help in better and smooth trade to Non-Resident Investments

Advising On

Mergers & Take-

Over

Middlemen in setting negotiation, provide advise

Arranging Offshore

FinanceHelp in areas funds involving foreign currency

Management of

Debenture Issue

As in public issue of shares, merchant bankers also undertake similar responsibilities in case of

public issue of debentures

Assistance in issue

of ADR/GDR

Merchant bankers helps Corporate to issue ADRs/GDRs in US and other global markets

MERCHANT BANK

• They Serve mainly large companies and very wealthy individuals.

• Merchant banking focuses on investing a depositor’s assets in a finance portfolio and managing these investments

• Merchant banks are commonly called as “Investment Banks”

COMMERCIAL BANK

• This is accessible to anyone for basic banking needs

• A commercial bank can provide loans to individuals and small businesses

• Typically referred to as “Banks”

COMPARISION BETWEEN MERCHANT BANK & COMMERCIAL BANK

MERCHANT BANK

• Apart from raising funds by investing and managing the assets of wealthy clients, it also offers counsel and advice to large corporations

COMMERCIAL BANK

• It raises funds by collecting deposits from groups of people as well as interest charged on loans

Problems of MERCHANT BANKERS

SEBI guidelines have authorized merchant bankers to undertake issue related activities only.

SEBI guidelines stipulate a minimum net worth of Rs. 1 crorefor authorization of merchant bankers.

Non co-operation of the issuing companies.

THANK YOU