MERCHANT

BANKING IN
INDIA

CONTENTS

Concept
Function and Growth
Government policy on Merchant
Banking services
SEBI Guidelines
Future of Merchant Banking in India

INTRODUCTION

In India, Merchant bankers are a body

corporate who carries on any activity of
the issue management, which consist of
preparing prospectus and other
information relating to the issue.
Merchant banks in India are not allowed
to conduct any business other than that
related to securities market. There is no
official category in investment banking.

DEFINITION

According to Coax. Merchant banking

is defined as" merchant banks are
the financial institution providing
specialist services which generally
include acceptance of bills of
exchange, corporate finance,
portfolio management and other
banking services.

HISTORY AND ORIGIN OF

MERCHANT BANKING IN INDIA

Origin
Merchant banking in India historical
perspective
Merchant bank
The most familiar role of the
merchant bank is stock underwriting
Importance and need of merchant
banking

ROLE OF MERCHANT BANKER

Main objectives of merchant bankers

Responsibilities of merchant bankers
Code of conduct

THE GROWTH OF MERCHANT

BANKING IN INDIA

Formal merchant activity in India was originated in

1969 with the merchant banking division setup by
Grind Lays Bank, the largest foreign bank in the
country. the main service offered at that time to the
corporate enterprises by the merchant banks
included the management of public issues and some
aspects of financial consultancy. Following Grind
Lays Bank ,Citibank setup its merchant banking
division in 1970. banking commission in 1972,that
Indian banks should offer merchant banking services
as part of the multiple services, state bank of India
started the merchant banking division in 1972.bank
of india and syndicate bank in 1977.bank of baroda
started charted bank mercantile bank in 1978 and
united bank of india.

SERVICES PROVIDE BY
MERCHANT BANKS
Corporate counseling
Project counseling
Credit syndication and project finance
Issue management and underwriting
Underwriting of public issue
Bankers to the issue
Portfolio management
Advisory services relating to mergers and
takeovers: Venture capital financing
Leasing
Non-resident investment counseling and
management

Acceptance credit and bill

discounting
Advising on mergers, amalgamations
and take-over
Arranging offshore finance
Management of fixed deposit broking
Relief to sick industries

GUIDELINES OF SEBI

If any companys other income exceeds 10% of

the total income, the detail should be disclosed.
The minimum application money payable should
not be less than 25% of the issue price.
The company should disclose the time normally
taken for the disposal of various types of
investors grievances.
The company can make firm allotments in public
issues as followsIndian mutual funds(20%)
FIIS(24%)
Regular employees of the company(10%)
Financial institutions(20%)

FUTURE OF MERCHANT
BANKING

Time and again the merchant banking industry

UN India witnessed, experienced and
underwent significant changes. The very
purpose for which these firms are commencing
there services should be taken care of and
they should mould there policy decision and
activities to move in tune with the main
objective of investors protection and to create
healthy environment in capital markets. No
doubt ,merchant banking firms are subject to a
host of control measures, regulations and
rules framed and guided SEBI.

THANKYOU