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Merchant Banking Final
Merchant Banking Final
BANKING«?
Meaning
Merchant Banking may be defined as ³an
µinstitution which covers a wide range of
activities such as Underwriting of shares,
Portfolio Management, Project Counseling,
Insurance, Issue Management etc«
Dictionary meaning
³An organization that underwrites corporate
securities and advises clients on issues like
corporate mergers, etc. involves in the ownership
of commercial ventures.´
þ
h þrigin of merchant banking in India National
Grindlays bank in India initiated merchant
banking services in1969
h The Citibank followed it in 1970.
h The state bank of India was the first Indian
commercial bank to set up a separate merchant
banking division in 1973.
h ICICI followed it in 1974. both these Indian
merchant bankers emerged as leader in
merchant banking having done significant
business during the period 1974-85 in
comparison to foreign banks.
Ä Merchant banking began practice during the Middle Ages
in Italy and was introduced by grain merchants, making them
the original banks.
Ä In today¶s world, merchant banking involves many
activities to include, portfolio management, mergers and
acquisitions counseling, and acceptance credit, etc. Today¶s
merchant banks do not have the same characteristics of their
predecessors.
Ä Modern merchant banks offer a wide range of activities,
including portfolio management, credit-syndication,
acceptance credit, counsel on mergers and acquisitions,
insurance, etc
Ä -oan syndication.(CREDIT)
Ä Portfolio management.
Ä Project Counseling.
Ä Project finance
Ä Issue management (Pre &Post Issue)
Ä Mergers Amalgamations and takeovers.
Ä þff Shore Finance
Ä Arrange for Rehabilitation of sick projects.
h It regulates the rising of fund in primary market.
h It assures the issuer a market for rising resource
at low cost, effectively and easily.
h Easily it ensures a high degree of protection to
the interest of the investors.
h It provides for the merchant banker a dynamic
and competitive market with high standard of
professional competence , integrity and solvency.
h It ensures fair efficient and flexible primary
market to all involved in the process of primary
issue.
h Applicant should be a body corporate
h Applicant should not carry on any business other than those
connected with security markets.
h Should have the necessary infrastructure
h Should have at least 2 employees with experience in merchant
banking
h Any associate or subsidiary company should not have been a
registered merchant banker.
h The applicant should not be involved in any securities scam
or proved guilty for any offence.
h Should have a min net worth of 5crores.
h Commercial banks (SBI, Canara Bank.BþB)
h All india financial institutions
h Private consultancy firms
h Technical consultancy organizations.
þ
ÎAn initial authorization fee, an annual fee and renewal fee may be
collected by SEBI
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