Registration with SEBI as Merchant Banker:

Q. Is it mandatory for a merchant banker to register with the SEBI?

A. Yes. Without holding a certificate of registration granted by the Securities and Exchange Board
of India, no person can act as a merchant banker.

Q. Who is eligible to obtain registration as a merchant banker?

A. Only a body corporate other than a non-banking financial company shall be eligible to get
registration as merchant banker.

Q. What are the various categories for which registration can be obtained?

A. The categories for which registration may be granted are given below:

Category I – to carry on the activity of issue management and to act as adviser, consultant,
manager, underwriter, portfolio manager.

Category II - to act as adviser, consultant, co-manager, underwriter, portfolio manager.

Category III - to act as underwriter, adviser or consultant to an issue

Category IV – to act only as adviser or consultant to an issue

Q. What is the capital requirement for carrying on activity as merchant banker?

A. The capital requirement depends upon the category. The minimum net worth requirement for
acting as merchant banker is given below:

Category I – Rs. 5 crores

Category II – Rs, 50 lakhs
Category III – Rs. 20 lakhs
Category IV – Nil

Q. What is the procedure for getting registration?

A. An application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers)

Regulations, 1992. SEBI shall consider the application and on being satisfied issue a certificate of
registration in Form B of the SEBI (Merchant Bankers) Regulations, 1992.
Q. What is the registration fee payable to SEBI?

A. Rs. 5 lakhs which should be paid within 15 days of date of receipt of intimation regarding
grant of certificate.

Q. What is the validity period of certificate of registration?

A . Three years from the date of issue.

Q. How to renew the certificate?

A. Three months before the expiry period, an application should be submitted to SEBI in Form A
of the SEBI (Merchant Bankers) Regulations, 1992. SEBI shall consider the application and on
being satisfied renew certificate of registration for a further period of 3 years.

Q. What is the renewal fee payable to SEBI?

A. Rs. 2.5 lakhs which should be paid within 15 days of date of receipt of intimation regarding
renewal of certificate.

Q. What is the consequence of non-registration or failure to renew registration?

A. The person whose registration is not current shall not carry on the activity as merchant banker
from the date of expiry of validity period.

Equipment Finance

Conserving your Business Capital

As your business grows, so do the number of decisions you have to make regarding the finance of
your Motor Vehicles, Plant and Equipment etc. Your decision to either purchase goods from available
cash flow or finance them may have both cash flow and taxation implications for your business. What’s
best for your business will very much depend on your circumstances at the time.

Bendigo Bank have experienced and professional Business Banking Managers and an Equipment
Finance Department which specialises in this field of finance which will assist you to make the
appropriate decision for your business capital needs. A member of our highly experienced team will sit
down with you and assess your requirements and then make a prompt recommendation on a course of
action.

You'll find that we're competitive, flexible and able to offer you a choice of terms and finance options.
What sort of business equipment do we finance?

Bendigo Bank can organise finance for a wide range of items, including:

• cars, utilities and light commercial vehicles

• trucks and buses
• forklifts, cranes and earthmoving equipment
• computing and office equipment
• printing, medical and manufacturing equipment
• industrial plant equipment.

Origin of Merchant Banking

The origin of merchant banking is to be traced to Italy in late medieval times and France
during the seventeenth and eighteenth centuries. The Italian merchant bankers
introduced into England not only the bill of exchange but also all the institutions and
techniques connected with an organized money market during seventeenth and
eighteenth centuries. In France a merchant banker (le merchant banquer) was not
merely a trader but an entrepreneur par excellence. He invested his accumulated profits
in all forms of promising activities. He added banking business to his merchant activities
and became a merchant banker.

Merchant Banking in India

Merchant banking activity was formally initiated into the Indian capital Markets when
Grindlays bank received the license from reserve bank in 1967. Grindlays started with
management of capital issues, recognized the needs of emerging class of
entrepreneurs for diverse financial services ranging from production planning and
system design to market research. Even it provides management consulting services to
meet the requirements of small and medium sector rather than large sector. Citibank
Setup its merchant banking division in 1970. The various tasks performed by this
divisions namely assisting new entrepreneur, evaluating new projects, raising funds
through borrowing and issuing equity. Indian banks Started banking Services as a part
of multiple services they offer to their clients from 1972. State bank of India started the
merchant banking division in 1972. In the Initial years the SBI's objective was to render
corporate advice And Assistance to small and medium entrepreneurs. Merchant banking
activities is of course organized and undertaken in several forms. Commercial banks
and foreign development finance institutions have organized them through formation
 divisions, nationalized banks have formed subsidiaries companies and share brokers
and consultancies constituted themselves into public limited companies or registered
themselves as private limited companies. Some merchant banking outfits have entered
into collaboration with merchant bankers abroad with several branches

Nature of merchant banking

The services of merchant bank cover project counseling, pre investment activities,
feasibility studies, project reports, design of capital structure, issue management,
underwriting, loan syndication, mobilization of funds, foreign currency finance, mergers,
amalgamation, takeover, venture capital and public deposits. Merchant banking is skill
based activities and involves serving financial need of every client. Merchant bankers
can turn to any of the activities depending upon resources, such as capital, foreign tie-
ups for overseas activities and skills.

The depth and sophistication in merchant banking business are improving since the
avenues for raising funds are widening and demands for funds is increasing.

The authorized activities include issue management which consists of preparation of

prospectus and other information relating to the issue, determining financing structure,
and tie up of finances and final allotment or refund of subscription, corporate advisors to
the issue and underwriting. Other authorized activities would be portfolio management
services

Types of issues

• Public issue
• Exchange issue
• Bonus issue
• Rights issue

Public issue:

Public issues of securities, debentures or shares are made in the primary market. The
funds mobilized through primary market constitute investment. An offer to public is
made through issue of prospectus or subscribed directly. Different media newspapers
televisions periodicals are used for publicity. The intermediaries who organize these
activities are merchant bankers. In past stock brokers used to organize public issue.
Initial issues are issues of shares for the first time either after incorporation or
conversion from private limited to public limited company. The initial as well as further
 issues may be offered for cash subscription or for consideration other than cash such as
change of ownership either of physical assets or technical know-how.

Exchange issue:

An exchange issue is one in which shares of one company are exchanged for another
as in case of takeover and mergers. It does not add to funds of the company making the
exchange although the merger may result in synergy. Another form of issue that does
not result in raising new funds is the bonus issues. Bonus shares are distributed to
determine proportion to existing shareholders.

Right issues:

Right issue is the issue of new shares in which existing shareholders are given pre-
emptive rights to subscribe to new issue. They are issued at a premium, which is freely
determined by the company making the issue.

Contents of prospectus

• A prospectus specifies the following:

• objective of the company
• memorandum of association
• number and classes of shares
• number of redeemable preference shares
• qualification of directors and their remuneration
• particulars about managing directors and directors
• minimum subscription for shares
• the time and opening of subscription lists
• amount payable for application and allotment of each shares
• shares issue for consideration other than cash
• name of the underwriter
• underwriting commission
• preliminary expenses and issues expenses
• particulars of the auditors
• interest of directors and promoters
• voting and dividend rights
• time of business
• capitalization of profits and surplus from reevaluation of assets