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"   !    


 M   is a financial institution primarily engaged in offering

financial services and advice to corporations and to wealthy
individuals. The term can also be used to describe the private equity
activities of banking.
 The chief distinction between an investment bank and a merchant
bank is that a merchant bank invests the banks own capital in a client
company whereas an investment bank purely distributes (and trades)
the securities of that company in its capital raising role.
 Both merchant banks and investment banks provide fee based
corporate advisory services including in relation to mergers and


ÿ arlier   concentrated on the manual change of

different currencies operated locally and later accepted deposits for
security reasons

ÿ n the course of time,   evolved into public or

deposit banks


Exchangers operate internationally.

They are engaged in

À Àrok ng
ra s ng fore gn exchange
prov s on of ong term cap ta for puÀ c Àorrowers

m # $  

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Management of the customers securities

Management of the portfolio
Management of projects
Management of counseling as well as appraisal
Management of underwriting of shares


ÿ nswer the following questions:

1. Who authorizes the services being rendered by merchant banking?
2. re the merchant banks being supported from capital market for the
corporate sector for financing their projects?
3. What does the merchant banker¶s dynamism lie in?
4. What are the differences between exchanger and money changer?


ÿ The merchant bank operates in the financial markets which exist

within the financial system of the nation.

ÿ The financial market in ndia comprises the '   and the
institutions which operate the financial markets and the financial
instruments with which financial system is put into operation.

ÿ The role played by the different institutions in the financial system is

assessed in the following paragraphs which will determine the success
of the economic reforms currently underway for the upliftment of the
financial markets and upgradation of the role of the merchant




    ! " #







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ÿ ill in the blanks:

 rB plays a very important role in the merchant banking system of
ndia as it is the ____________ ____________.
 Banks implement the rB¶s ____ ____ _____ policies.
 One objective of forming OTC  is ___ ____ __.

    ( $ 

Ú borrowing and lending. t provides short-term liquidity funding for

the global financial system. The money market is where short-term. n

finance, the money market is the global financial market for short-term
obligations such as Treasury bills, commercial paper and bankers'
acceptances are bought and sold´



Call Money Commercial Certificate of

Treasury Bills Market
Bills Papers Deposits

d hoc

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ÿ The policy plays a vital role.

ÿ oreign investment approvals up to 51% of equity in a specified list of
è pr or ty ndustr es was made automat c, subject only to
registration procedure with the reserve Bank of ndia
ÿ nvestment above 51% of equ ty was also permitted on the basis of
case by case approvals given by specially constituted Fore gn
Investment Promot on Board (FIPB) charged with expeditious
processing of governmental approvals.
ÿ The procedure for ndian companies to invest abroad and develop
global linkages in this way was also streamlined and made easier


ÿ Define Money market. xplain why it is called money market.

ÿ What are the important steps announced by the government in the
foreign investment policy?
ÿ What is a Certificate of Deposit? What is the use of the CD?
ÿ Where is the use of Commercial Papers?

( "

(  detailed analysis of the money market)
(Money market defined in simple terms)
(nearly every thing related to merchant banking terms are given
in very simple terms)
(B&O rr common stock picture)

(  !'