Merchant banking

[object Object],Business of money. Intermediary Channel . Advisory services to existing units for expanding and diversifying production. Renderer of non-banking services. Gives assistance to set up new industrial ventures .

[object Object],“A kind of financial institution which provides a variety of services such as investment banking, management of customer’s securities, portfolios, insurance, acceptance of bills, etc. is known Merchant Banking.” “It is a fee-based business, where the bank assumes market risks but no long-term credit risk.” “It is a vision, investment banking is a technique.” “It is a conversion of dreams into reality with the help of money.”

The term merchant banking originated from the London who started financing foreign trade through acceptance of bills.

Later on, they helped government of under developed countries to raise long term funds.

Thereafter, these merchants formed an association which is now called “Merchant Banking and Securities House Association.”,[object Object]

[object Object],Combination of Banking and Consultancy Services. Acts as a Financial Engineer. Provides variety of Services.

[object Object],Growth of Primary Markets. Purchasing Securities. Capital Flow. Promoting Financial Surplus. Coordinating activities to the Share Issue. Complying with Rules and Regulations.

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[object Object],SEBI’s authorization is a must to act as Merchant Bankers. Authorisation criteria include – ,[object Object]

Prohibition from buying Securities.

Appointment of Compliance Officer.,[object Object]

Should inform the Board about any legal proceedings initiated against it. Should abide by the rules of “Securities and Exchange Board of India Regulations,2003 .” It is responsible for the act of its Employees and Agents. Should not create false market.

Merchant banking

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