1. Merchant Banking
Business
Made by
Mr. Vishal Narvekar
[S.Y.B.F.M .]

2. Table of content
Introduction
History
Main services provided by merchant banks
Who can be merchant banker?
Requirements for setting up a merchant bank
Categories of merchant bankers
Qualities of A merchant banker
Merchant banking in India
Main merchant banking companies
Key foreign players
Merchant banking structure in India
Ranking of merchant banks in India
Conclusion

3. 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”

4. 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

5. 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

6. Main Services Provided By Merchant Banks
Particular Summary
Corporate Covers the entire field of merchant banking , of
Counselling giving suggestions
Project Preparing project report for govt. Approval ,
Counselling financial assistance
Assistance rendered to get term loan for project,
Loan Syndication help client make appraisal, designing capital
structure etc
Drafting, completion of formalities, appoint
Managers to Issue
Registrar etc
Guarantee given by the underwriter, make raising
Underwriting
of external resource easy
Portfolio
Investment in different kind of securities
Management

7. Non-Resident Provide help in better and smooth trade to
Investment Non-Resident Investments
Advising On
Mergers & Take- Middlemen in setting negotiation, provide advise
Over
Arranging Offshore
Help in areas funds involving foreign currency
Finance
As in public issue of shares, merchant bankers
Management of
also undertake similar responsibilities in case of
Debenture Issue
public issue of debentures
Assistance in issue Merchant bankers helps Corporate to issue
of ADR/GDR ADRs/GDRs in US and other global markets

8. Who can be Merchant Banker?
• Commercial banks
Public • FI
sector • State institutions
• Banks
Private • Finance /
investment
sector companies
• Leasing companies
International
banks

9. Requirements For Setting Up A
Merchant Bank

10. Registration of Merchant Bankers
Application for grant of certificate
Furnishing of information, clarification
and personal representation
Consideration of application
Grant of a certificate
Payment of fees and the consequences
of failure to pay fees

11. Application For Grant Of Certificate
 An application for grant of a certificate needs to
be made to SEBI
 The application can be made for any one of the
following categories :-
Category I
Category II
Category III
Category IV
 For underwriter or portfolio manager a separate
certificate of registration needs to be obtained
from SEBI

12. Furnishing Of Information And
Personal Representation
The Board may require the applicant to furnish
further information or clarification regarding
matters relevant to the activity of a merchant
banker
The applicant or its principal officer may
appear before the Board for personal
representation

13. Consideration Of Application
Applicant complies with the following
requirements:-
The applicant shall be a body corporate other than
a non- banking financial company
The applicant has the necessary infrastructure like
adequate office space, equipments, and
manpower to effectively discharge his activities
The applicant has minimum of two persons as
employ who have the experience in the business
of the merchant banking

14. Consideration Of Application contd
The applicant, his partner, director or principal
officer is not involved in any litigation connected
with the securities market which has an adverse
bearing on the business of the applicant and have
not at any time found guilty for any economic
offence
The applicant has the professional qualification from
an institution recognized by the Government in
finance, law or business management
Grant of certificate to the applicant is in the interest
of investors

15. Consideration Of Application contd
The applicant must fulfils the capital adequacy
requirement is as follows :-
The capital adequacy requirement should not be less than
the net worth of the person making the application for grant
of registration
The net worth shall be as follows:-
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

16. Grant Of A Certificate
The Board on being satisfied that the
applicant is eligible shall grant a certificate
On the grant of a certificate the applicant shall
be liable to pay the fees as prescribed

17. Payment Of Fees And The
Consequences Of Failure To Pay Fees
 Every applicant eligible for grant of a certificate
shall pay such fees in such manner and within the
period specified
 Where a merchant banker fails to pay the Annual
fees, the Board may suspend the registration
certificate
 A merchant banker has to pay to SEBI :-
Applicant fee of 25000
Registration Rs 10 lakhs
Renewal fee of Rs 5 lakh 3 years from the 4th year
from the date of initial registration

18. Categories Of Merchant Bankers
Category Role Fees charged
Issue management
Advisor •2.5 lakhs for first two
Category I Consultant years
Manager •1.50 lakhs for 3rd year
Underwriter
Portfolio manager
Advisor
Consultant •1.5 lakhs for first two
Category II Underwriter years
Portfolio manager •50,000 for 3rd year
Co-manager
Underwriter
Category III Advisor •Minimum 50,000
consultant
Advisor
Category IV Consultant •Minimum 50,000

19. Qualities of a Merchant Banker

20. 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..

21. Main Merchant Banking companies
• ICICI Securities
• SBI capital markets
ltd
Ltd
• Punjab national • Axis Bank Ltd
bank • Bajaj Capital Ltd
• Bank of • Reliance
Public Maharashtra
• Karur Vysya bank ltd Private Securities
Limited
Sector • State Bank of
Bikaner and Jaipur. Sector • Kotak Mahindra
Capital
• IFCI financial
services ltd. Company Ltd
• Yes Bank Ltd

22. Key Foreign Players
Goldman Sachs (India) Securities Pvt. Ltd.
Morgan Stanley India Company Pvt. Ltd.
Barclays Securities (India) Pvt. Ltd.
Bank Of America
Citigroup Global Markets India Pvt. Ltd.
DSP Merrill Lynch Ltd.

23. Merchant Banking structure in India
Merchant
banks
INTERNATIONAL
PUBLIC SECTOR PRIVATE SECTOR
BANKS(10)
COMMERCIAL
BANKS (10)
BANKS (24)
FINANCIAL FINANCE AND
INSITUTION (6) INVESTMENT (231)
STATE INSITUTIONS (4)

24. Ranking Of Merchant Banks in India
Merchant Overall Financial Quality of Quality Innovativeness
Banker Excellence Soundness Product & Management
Service
ICICI
Securities
4 4 4.2 3.8 4.3
IDBI
4.2 3.2 4.5 4 4.8
SBI Caps
4.4 3.9 4.6 6.7 5.2
DPS
6.1 5.7 6 6 5.3
IFCI
6.1 5.7 6 6 6.3

25. Webliography
Webpage Link
Wikipedia.org http://en.wikipedia.org/wiki/Merchant_banking
Fdic.gov http://www.fdic.gov/bank/analytical/banking/20
01sep/article2.html
ukessays.com http://www.ukessays.com/essays/english-
language/merchant-banking-in-india.php
investopedia.com http://www.investopedia.com/terms/m/mercha
ntbank.asp#axzz2EqgN9tfw

26. THANK YOU