PRESENTED TO PROF VIDYASHEELA BANERJEE

Name Robin Awathare Jatin Kambli Mahesh Patade Rakesh Patil

Roll No. M1001 M1016 M1034 M1036

Introduction History Merchant banking in India Role of merchant bank Setting up a merchant banking outfit Objectives Obligations and Responsibilities Code of Conduct Guidelines of SEBI

Merchant bankers assist corporate in raising capital. They assist in issue of Shares, syndicating loans, public issue of debentures. They also actively arrange working capital, appraisal Projects scrutinize & persuade merger proposals. In BRITAIN merchant bankers & investment bankers are synonymous. In the U.S., Merchant bank means as investment bank which is well-equipped to handle multinational corporations. Merchant banks in India are not allowed to conduct any business other than that related to securities market.

ORIGIN Merchant Banking in India Historical Perspective 1. JAGAT SHETH (1720-1773AD, BENGAL) 2. HABIB & SONS which is now HABIB BANK

Merchant Banking in India Post Independence 1. In 1967, RBI issued its first merchant banking license to grind lays 2. State bank of India started the merchant banking division in 1972

Stock underwriting Project counselling Loan syndication Issue management Portfolio management Nri investment : Advisory service relating to mergers and takeovers

Formation of the Business Organization Adoption of a viable business plan Registration of Merchant Bankers
1. Application for grant of certificate 2. Application to conform to the requirements 3. Furnishing of information, clarification and personal representation 4. Consideration of application 5. Procedure for Registration 6. Payment of fees and the consequences of failure to pay fees

Industry compartmentalization
o Expertise in underwriting, hire purchase, leasing, and portfolio management, money-lending, etc. o RBI does not permit merchant banking firms to get into these activities o promoters have to setup different companies for different purposes o Management cost increases and expertise pooling i.e. multiple use of same talent is not possible

Malafide practices o Corporate have excessively friendly approach o Favored allotment of shares, tampering with project appraisal report to bankers is common o Corporate like to use merchant bankers for malafide intentions

Regulations
o Much better and scope for further improvement
o More accountable and responsible o Professional qualification focused on merchant banking is not available

Size and dynamics of the market

o Indian market is growing. In fact India is one of the largest emerging markets. Obviously, public issues, FDI, debt raising are on rise. Lots of new projects are happening. Merchant bankers have lots space to contribute.

Banking policies
o RBI prefers that commercial banks do not indulge in
merchant banking business directly. o They should setup a subsidiary for the purpose. This

limits scope of commercial banks and gives space to

merchant bankers. o Some countries allow commercial bankers to get

involved in IPOs, placement of debentures, etc.

o Indian scenario is favorable to merchant bankers.

Corporate culture
o corporate can do project appraisal, strategic restructuring in house as well. o If the corporate prefer third-party independent assessment, then only they will engage merchant bankers. Otherwise merchant bankers role is only

statutory as in issue management.

Corporate dynamics
o More happening in business gives more opportunities to merchant bankers. o Mergers, takeover acquisition, new projects, fund raising for government institutions, active money market are all providing better business prospectus

to merchant bankers.

Upto 1970, there were only two foreign banks SBI was the first Indian commercial bank and ICICI the first financial institution to take up the activities in 1972 and 1973 respectively In 1980s some commercial banks set up their subsidiaries Large stock broking firms and financial consultants Growth after the process of economic reforms and deregulation of Indian economy in 1991

The number of merchant banks increased to 115 by the end of 1992-93, 300 by the end of 1993-94 and 501 by the end of August, 1994 A large number of reputed international Merchant Bankers like Merrill Lynch, Morgan Stanley, Goldman Sachs, etc.

Leading Merchant Bankers in India, offering specialized services to Banks, PSUs, State owned Corporations, Local Statutory bodies and corporate sector Services o Merchant Banking o Commercial Banking o Investments o Underwriting o Loan Syndication

Other Services

o Equity Issue (Public/Rights) Management o Debt Issue Management o Private Placements o Project Appraisals o Monitoring Agency Assignments o IPO Funding o Agriculture Consultancy Services o Corporate Advisory Services o Mergers and Acquisitions o Buy Back Assignments o Share Valuations

Issue management services

o Project Appraisal o Capital structuring o Preparation of offer document o Tie Ups (placement) o Formalities with SEBI / Stock Exchange / ROC etc., o Underwriting o Promotion /Marketing of Issues o Collecting Banker / Banker to an issue o Post Issue Management o Refund Bankers o Handling of Dividend Warrant/Interest Warrant Payments o Debenture Trusteeship