DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH

Name : MAJOR K.SIVA KUMAR

Designation : HEAD OF SECTION
Branch : Diploma in Commercial and Computer
Practice
Institute : Government Polytechnic, Srikakulam
Year/Semester : V Semester
Subject : Banking
Subject code : CCP 504 (B)
Topic : Lead Banks and Merchant Banking
Duration : 50 min
Sub Topic : Functions of Merchant Bankers
Teaching Aids : PPT and Animations
CCP504 (B).82 1
Functions Of Merchant Bankers

Objectives:

On completion of this period, you would be able to:

 Understand the functions of Merchant Bankers in

detail

CCP504 (B).82 2
Recap

In the previous class, you have learnt the

functions of merchant bankers. They are:

 Project counseling and feasibility studies

 Loan syndication
 Corporate counseling
 Issue management and underwriting
 Debenture trusteeship

CCP504 (B).82 3
Recap
 Portfolio Management

 Venture Capital

 Mergers and amalgamations

 Public deposits

 Acceptance house business

 Export Financing for capital goods

CCP504 (B).82 4
Recap
 Hire purchasing

 Equipment leasing

 Investment trust

 Valuation of assets

 Financial management

CCP504 (B).82 5
Known To Unknown - Quiz

(1) Which of the following is a function of

merchant bankers?

(a) Portfolio Management

(b) Credit Rating
(c) Preparing monetary Policy
(d) None

CCP504 (B).82 6
Known To Unknown - Quiz

(2) Merchant banking is a

(a) fee-based service

(b) fund based service

(c) Reserve based service

(d) Leadership

CCP504 (B).82 7
Known To Unknown - Quiz

(3) Which of the following subsidiary was floated by

State Bank of India to perform Merchant Banking
activity?.

(a) Syndicate Bank

(b) SBI capital markets Ltd (SBI CAP)
(c) HDFC
(d) None

CCP504 (B).82 8
Known To Unknown - Quiz

(4) Which of the following is Canara Bank’s

subsidiary to perform the merchant banking
business?

(a) BOB Fiscal

(b) Canfina
(c) ICICI
(d) HDFC

CCP504 (B).82 9
FUNCTIONS OF MERCHANT
BANKERS
1. Project Counseling and feasibility
studies:-

 A merchant banker helps an entrepreneur in

conception of ideas.

 He helps the entrepreneurs in identification of

Projects.

 He prepare the project reports and feasibility

reports.

CCP504 (B).82 10
FUNCTIONS OF MERCHANT
BANKERS

 He helps them in selecting the suitable locations to start

the industries

 He assists the entrepreneurs in obtaining money,

sanctions or approvals from State and Central
Government Departments

CCP504 (B).82 11
Credit syndication or loan
syndication:-

 Merchant bankers undertake preparation of project

files, loan applications for financial assistance on
behalf of promoters from different Financial
Institutions.

 These applications are prepared for meeting long term

as well as working capital requirements of their clients.

CCP504 (B).82 12
 Corporate Counseling:-

 Merchant bankers conduct corporate counseling

for financial institutions.

 The give suggestions for rehabilitation and

reconstruction of old/ ailing or sick industrial units.

CCP504 (B).82 13
Summary

Merchant Bankers are performing a variety of

services. They include:

(a) Project counseling and feasibility studies

(b) Loan syndication

(c) Corporate counseling

CCP504 (B).82 14
Quiz
1. Project counseling includes the following
activity

(a) Conception of ideas

(b) Depositing funds

(c) Mercantile activity

(d) Rehabilitation

CCP504 (B).82 15
Quiz

2. Merchant Bankers Prepare loan application for

(a) Financial assistance

(b) Moral support

(c) Technical support

(d) None

CCP504 (B).82 16
Quiz
3. Merchant bankers prepare loan application for
getting

(a) Long term and short term loans

(b) to purchase Stationery

(c) Medium term loans

(d) None

CCP504 (B).82 17
Quiz

4. The merchant bankers help in getting sanctions

from

(a) State and Central Govt. departments

(b) Public

(c) RBI

(d) Municipal authorities

CCP504 (B).82 18
Questions

1. What is Project Counseling?

2. What do you understand by Credit syndication?

3. What is Corporate Counseling?

CCP504 (B).82 19