Merchant bankers are engaged in raising finance for clients through activities like managing public issues, right issues, and open offers. To obtain a certificate as a merchant banker, an applicant must be a body corporate, act as a primary dealer after registration, have necessary infrastructure, and meet capital adequacy requirements. The key functions of merchant bankers include raising finance, advising on expansion, managing public issues, and providing various financial services. SEBI guidelines govern merchant bankers' responsibilities and obligations related to public issues. Merchant bankers are classified into four categories by SEBI based on their professional competence, capital adequacy, experience, reputation, and quality of employees.

1. MERCHANT BANKER

2. EVOLUTION
• It was firstly started in London merchants by
entering in financing foreign bills.
• Over a period they extended their activities to
domestic business.
• The post war period witnessed rapid growth of
merchant banking.

3. WHO IS M.B?
It is a person who is engaged in a business of
issue management. It is mandatory to appoint
a merchant banker in case of public issue,
right issue, open offers etc.

4. CONSIDERATION FOR GRANTING
CERTIFICATE
STEP 1: The applicant shall be a body corporate.
STEP 2: After granted registration they have to
act like a primary dealer.
STEP 3: Applicant must have the necessary
infrastructure.
STEP 4: The applicant should have working
experience of 2 yrs.
STEP 5: Should fulfill the capital adequacy
requirement.

5. FUNCTIONS
• Raising finance for clients
• Broker in stock exchange
• Project management
• Advice on expansion and modernisation
• Managing public issue of company

6. • Handling government consent for industrial
projects.
• Leasing services
• Portfolio management
• Services to public sector units

7. SCOPE
Below mentioned points are scope of merchant
banking
• Growth of new issue market
• Entry of foreign investors
• Changing policy of financial institiutions
• Disinvestments
• Corporate restructuring

8. SERVICES
• Corporate counselling
• Loan syndication
• Post issue management
• Portfolio management
• Project counselling

9. RESPONSIBILITIES
With regards to SEBI and IPO responsibility of a
merchant banker are:-
• No merchant banker shall agree to manage
with any issue
• Advisory services for project
• Managing of public issue of securities
• Educating the applicant company
• Underwriting arrangement

10. OBLIGATIONS
OBLIGATIONS ARE DIVIDED INTO TWO
CATEGORIES:
Pre-issue obligations
Post-issue obligations

11. Pre-issue obligation
• Submitting the offer document
• Submitting the undertaking
• Submitting of list of promoters group
• Appointments of intermediaries
• Making the offer document public
• Entering into an agreement with the
depositaries

12. Post-issue obligation
• Submitting post issue monitoring report.
• Redressal the investor grievances.
• Maintaining the close co-ordination with the
intermediaries.
• Insuring full subscription of the issue.
• Verified post issue advertisement details.
• Finalising the basic of allotment and allotment
process.

13. SEBI GUIDELINES
SEBI has made the following reforms:-
• Multiple category of merchant banker will be
abolished.
• The merchant banker is allowed to perform
underwriting activity.
• They have to confine himself only to capital
market activities.

14. RECOGNITION BY SEBI
• Professional competence of merchant bankers.
• Their capital adequacy.
• Track record, experience and general
reputation of merchant bankers
• Adequacy and quality of personal employed by
them.

15. CLASSIFICATION OF M.B
SEBI has classified it into 4 categories
CATEGORY 1
CATEGORY 2
CATEGORY 3
CATEGORY 4

16. THANK YOU..!!