Merchant banker

23,365 views

Published on

Study Of Merchant Banking In India .

Published in: Education
4 Comments
62 Likes
Statistics
Notes
No Downloads
Views
Total views
23,365
On SlideShare
0
From Embeds
0
Number of Embeds
10
Actions
Shares
0
Downloads
0
Comments
4
Likes
62
Embeds 0
No embeds

No notes for slide

Merchant banker

  1. 1. Topic: Merchant Banking
  2. 2. Table of contentIntroductionHistoryMain services provided by merchant banksWho can be merchant banker?Requirements for setting up a merchant bankCategories of Merchant BankerQualities of A merchant bankerMerchant banking in IndiaCommercial Banking Vs Merchant BankingMain merchant banking companiesKey foreign playersMerchant banking structure in IndiaGuidelines for Merchant BankersConclusion
  3. 3. IntroductionAccording to SEBI Merchant Bankers rules 1992 & The Notification of the Ministry of Finance the merchant banker is :- “Any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to securities as manager-consultant, advisor or rendering corporate advisory services in relation to such issue management”
  4. 4. HISTORY Merchant banking started in Italy in late medieval times Reached in France during the seventeenth century Italian merchant bankers introduced Merchant banking into England in eighteenth century European bankers developed merchant banking In USA In 1972, merchant banking started in South Africa In 1967, National Grindlays Bank started merchant banking in India
  5. 5. Main Services Provided By Merchant Banks Project Counselling Loan Syndication Managers to Issue Underwriting Portfolio Management Non-Resident Investment Advising On Mergers And Take-Over Arranging Offshore Finance Corporate Restructuring
  6. 6. Who can be Merchant Banker? Private sector InternationalPublic sector banks
  7. 7. Requirements For Setting Up A Merchant Bank • Formation of the business organization • Adoption of a viable business plan • Registration of merchant bankers
  8. 8. Registration of Merchant BankersApplication for grant of certificate Furnishing of information, clarification and personal representation Consideration of application Grant of a certificate Payment of fees and the consequences of failure to pay fees
  9. 9. Consideration Of Application (contd)The applicant must fulfils the capital adequacy requirement is as follows :- The capital adequacy requirement should not be less than the net worth of the person making the application for grant of registration The net worth shall be as follows:- Category Minimum Amount Category I Rs. 5, 00, 00, 000 Category II Rs. 50, 00, 000 Category III Rs. 20, 00, 000
  10. 10. Payment Of Fees And The Consequences Of Failure To Pay Fees (contd)A merchant banker has to pay to SEBI :- Applicant fee of 25000 Registration Rs 10 lakhs Renewal fee of Rs 5 lakh 3 years from the 4th year from the date of initial registration
  11. 11. Categories Of Merchant Bankers Category Role Fees charged Issue management Advisor •2.5 lakhs for first twoCategory I Consultant years Manager •1.50 lakhs for 3rd year Underwriter Portfolio manager Advisor Consultant •1.5 lakhs for first twoCategory II Underwriter years Portfolio manager •50,000 for 3rd year Co-manager UnderwriterCategory III Advisor •Minimum 50,000 consultant AdvisorCategory IV Consultant •Minimum 50,000
  12. 12. Qualities of a Merchant Banker Ability to analyse Capital Abundant Market knowledgeFamiliarity Innovative Integrity approach
  13. 13. Merchant Banking In IndiaForeign bank National Grindlays Bank started merchant banking in 1967 Then Citibank in1970 & State Bank of India in 1972 started merchant banking Later ICICI set up its merchant Banking Division followed by Bank of India, Bank of Baroda, Canara Bank etc..
  14. 14. Commercial banking Vs Merchant bankingPOINTS COMMERCIAL BANKS MERCHANT BANKINGFunction Saving Financial accounts,loans,credit consultant,advisory cards,credit to services business,brokerage servicesHow They Make loans, issuing mortgages, profit from fees itMoney and by providing small charges its large business and home customers for the improvement loans services it providesEffect On The Economy Provide money for loans Provide money to large and also for expansion of corporations businessInvestment Can not buy securities No such investment more than five percent of regulations to merchant net incremental deposits of banks previous year
  15. 15. Main Merchant Banking companies • ICICI Securities • SBI capital markets ltd Ltd • Punjab national • Axis Bank Ltd bank • Bajaj Capital Ltd • Bank of • ReliancePublic Maharashtra • Karur Vysya bank ltd Private Securities LimitedSector • State Bank of Bikaner and Jaipur. Sector • Kotak Mahindra Capital • IFCI financial services ltd. Company Ltd • Yes Bank Ltd
  16. 16. Key Foreign PlayersGoldman Sachs (India) Securities Pvt. Ltd.Morgan Stanley India Company Pvt. Ltd.Barclays Securities (India) Pvt. Ltd.Bank Of AmericaCitigroup Global Markets India Pvt. Ltd.DSP Merrill Lynch Ltd.
  17. 17. Merchant Banking structure in India Merchant banks INTERNATIONALPUBLIC SECTOR PRIVATE SECTOR BANKS(10) COMMERCIAL BANKS (10) BANKS (24) FINANCIAL FINANCE AND INSITUTION (6) INVESTMENT (231) STATE INSITUTIONS (4)
  18. 18. Guidelines for merchant bankers• The Merchant Banker should have a professional qualification• Should comply with the SEBI regulations and submit reports accordingly• The Merchant Banker will be suspended if found violation of guidelines• Proper fess should be collected by SEBI• Proper information should be given when inspection by SEBI
  19. 19. Webliography Webpage LinkWikipedia.org http://en.wikipedia.org/wiki/Merchant_bankin gMerchantbankin http://www.merchantbankingresources.com/ingresources.com dex.php/about-us.htmlinvestopedia.co http://www.investopedia.com/terms/m/merchm antbank.asp#axzz2EqgN9tfw BibliographyFinancial Services by Vipul Prakashan
  20. 20. THANK YOU

×