The document discusses merchant banking in India. It defines merchant banking as arranging loans for companies and dealing in international finance, stocks, and launching new companies, without providing normal banking services to the public. It notes that merchant banking originated in Italy and France and later spread to the UK and US. In India, merchant banking became popular in 1983-84 and was first initiated by Grindlays Bank in 1969, providing public issue management and financial consulting. The functions of merchant banking include corporate counseling, portfolio management, venture capital financing, mergers and acquisitions, project counseling, and underwriting. SEBI classifies merchant bankers into four categories in India.

1. Merchant Banking in
India
Presented by
Rajesh Mandalik
Kumar Gaurav
Pranay Kargaonkar
Abdul Qadir Saify
Pavan Kumar Reddy
Mukesh Sahu

2. Merchant Banking
The Dictionary of Banking and Finance
defines a merchant bank as “ a bank which
arranges loans to companies, deals in
international finance, buys and sells shares
and launches new companies on the stock
exchange, but does not provide normal
banking services to the general public ”.

4. Bird’s eye view of Merchant Banking :
Merchant Banking is a fee-based service.
It arranges funds rather than providing them.
Originally Merchant Banking business was started in Italy
and France.
Later on, it came into existence in the U.K., and the U.S.A.
In India, it has become popular from 1983-84.

5. Merchant Banking In India
 The Grindlays Bank initiated the merchant banning
activity in Indian Capital Market in 1969.
 It’s business forms was on the management of Public
Issues and Financial Consultancy.
 City Bank introduced its merchant banking division in
1970.

6. Functions of Merchant Banking
 Corporate Counseling
 Portfolio Management
 Venture Capital Financing
 Mergers and Amalgamations
 Project Counseling
 Underwriting
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7. Contd....
Functions of Merchant Banking
 Export Financing for capital goods
 Hire purchasing
 Equipment leasing
 Investment trust
 Valuation of assets
 Financial management
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9. Private Investment Bankers
Lehman Brothers
Merrill Lynch etc.
Bought loans that fall outside the specs of agencies.

11. Who’s to blame?
Borrower:
Buy a house with 20% down payment to live in and later sell at a profit.
If this works out well, then …
Buy a house with 0% down payment to live in and later sell at a bigger
profit. If this works out well, then …
Buy two houses with 0% down payment and sell at a profit?
Investors
Buy a subprime loan and sell at a profit because losses less than
expected. If this works out well, then …
Buy risky piece – lower rated tranches – of pool of subprime loans and
sell at a bigger profit because losses less than expected.

12. Core Business Portfolio
Non-fund
Based
Merchant Banking Advisory and
Services transaction Services in
->Management of ->Project Financing.
Public Offers of Equity
and debt Instruments. ->Syndicated loans.
->Rights issues. ->Private Equity/Venture
Capital.
->Buyback Offers.
Etc. ->Business Advisory. Etc.

13. Core Business Portfolio
Fund Base Allied Businesses
->Asset Management services.
->Underwriting. --Mutual Funds.
->Market making. --Portfolio Management
->Bought Out Deals. --Venture capital etc.
->Trading in Equities, bonds and
derivatives. ->Secondary Market Services.
--Brooking
--Equity Research.

14. . Securities and Exchange Board of India (SEBI) has divided
merchant bankers into four categories, which are as follows: -