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PRESENTATION

ON
MERCHANT BANKING
Meaning
 The word merchant banking has been so widely
used that sometimes it is applied to bank who are
not merchant, sometime to merchant who are not
banks & sometime to that intermediaries who are
neither merchant nor bank.
 IN India , merchant banking services were started
only in 1967
By national gridlay bank.
The merchant bank mainly offers financial services
& advisory services for fee .
Diff in services between commercial bank &
merchant banking
Commercial bank
1.Accepting deposits of various types& maturities for purpose of
lending.
2.Providing working capital finance
3.Issuing credit card
4.Avalible of cash credit, overdraft, discounting of bills of exchange.
Merchant bank
1.Corporate counseling 4.Corporate advisory services
2.Project advisory 5. leasing
3.Issue management
Function of merchant
banking
 1. Corporate counseling
This services is provided free of charge to a corporate unit . Merchant
baker render advise to corporate enterprises for time to time in order
to improve performance and build better image.
 It guide corporate unit to area of diversification
 Merchant bank make a detail market analysis so as to evaluate
profitability of each product line, on the basis of analysis it advice
weather to continue expand or discontinue any product line.
2.Project counseling
 Project counseling basically covers the study of project and providing
advisory services. It cover the following aspect.
1. Development of an idea of project
2. Preparation a project report after consideration of financial, economic &
market feasibility.
3. Estimation of cost of project
4. Deciding the means of financial & the composition of various securities.
5. Studying the procedural aspect of project implementation.
6. Providing assistance in obtaining government consent for implementation of
project.
3. Portfolio management
 Merchant banks offer services not only to the companies
issuing the securities but also to the investor. merchat
bank render services to the investor by advising on the
optimum investment mix, taking in account following
factor.
1. Object of investment.
2. Tax bracket application to the investor.
3. Need for maximising return.
4. Capital appriciation.
4.Issue management
 Preparation of prospectus.
 Preparation of plan & budget to estimate
total expenditure of the issue.
 Appointment of registrar, broker and
bankers to issue.
 Selection of issue house
 Merchant banker advise the client weather
to go for-a fresh issue, a additional issue
,bonus issue.
5.Loan

 Merchant banker provide specialiged services in


preparation of project and loan application for raising short
term as well as long term credit from various bank and
financial institution.
 Other function
1. Arranging working capital
2. Bill discounting
3. Lease finance
4. Venture capital
5. Public deposit
Role of a merchant banker
 Managerial economist
 Financial and investment expert
 Manager to issue
 Rehabilitator
 Master in trading activity