This document defines and describes merchant banking. It began in Italy in the Middle Ages and later spread to other countries like France and England. Merchant banks provide capital to companies through equity investments rather than loans. They also provide advisory services. In India, merchant banking was introduced in 1967 and covers services like corporate counseling, project financing, and credit syndication. The document outlines the merchant banking structure and major players in India, and distinguishes merchant banking from commercial banking. It also defines a merchant account and describes how businesses can obtain one.

1. MERCHANT BANKING
by
prachi

2. CONTENTS
 Definition
 Origin
 About
 Services
 Scope in India
 Merchant Banking Structure in India
 Main Merchant Banking Companies
 Commercial Banking Vs Merchant Banking
 Merchant Account
 Methods of processing credit cards
 How to start a merchant account
 Required documents
 How to apply for merchant account
 Merchant banker
 Categories of Merchant Bankers
 Qualities of Merchant Bankers

3. DEFINITIONS
A merchant bank is a financial institution
providing capital to companies in the form of
share ownership instead of loans. A merchant
bank also provides advisory on corporate
matters to the firms in which they invest.

4. ORIGIN
Merchant Banking started in Italy in the
middle ages.
Reached in France during 17th century
In England, Merchant Banking was introduced
in 18th century.
Merchant banking came to India through
Grindlays Bank in 1967 and City bank in 1970.
SBI started the merchant banking division in
1972.

5. SERVICES
Corporate counselling
Project counselling
Working capital finance
Portfolio management
Restructuring strategies
Credit syndication
Lease financing
Other services

6. SCOPE IN INDIA
Growth of new issue market
Entry of foreign investors
Changing policy of Financial Institutions
Development of debt market

7. MERCHANT BANKING STRUCTURE IN
INDIA
MERCHANT BANKS
PUBLIC SECTOR PRIVATE SECTOR
INTERNATIONAL
BANKS(10)
COMMERCIAL
BANKS (24)
FINANCIAL
INSTITUTION (6)
STATE INSTITUTIONS (4)
BANKS (10)
FINANCE AND
INVESTMENT (231)

8. MAIN MERCHANT BANKING
COMPANIES
PUBLIC SECTOR PRIVATE SECTOR FOREIGN PLAYERS
SBI capital markets ltd. ICICI securities ltd. Goldman Sachs(India)
securities pvt. Ltd.
PNB Axis bank ltd. Morgan Stanley India
company pvt. Ltd.
Bank of Maharashtra Bajaj capital ltd. Barclays securities (Indi)
pvt. Ltd.
Karur Vysya bank ltd. Reliance securities ltd. Bank of America
State Bank of Bikaner and
Jaipur
Kotak Mahindra capital
company ltd.
Citigroup Global Markets
India pvt. Ltd.
IFCI financial services ltd. Yes bank ltd. DSP Merril Lynch ltd.

9. COMMERCIAL BANKING Vs
MERCHANT BANKING
COMMERCIAL BANKING MERCHANT BANKING
Catering needs of common man Catering needs of corporate firms
Anyone can open an account It cannot be done
Less exposed to risk More exposed to risk
Related to secondary market Related to primary markets
It’s asset oriented It’s management oriented
Plays the role of financers Plays different roles like underwriting,
portfolio etc.

10. MERCHANT ACCOUNT
A Merchant Account is a type of bank account
that allows businesses to accept payments in
multiple ways, typically debit or credit cards.

11. METHODS OF PROCESSING CREDIT
CARDS
Credit card terminal
Automated response unit
Payment gateway
Level 2 or 3 processing
Merchant account marketing
Marketing by banks
Marketing by Independent Sales
Organization(ISO)

12. HOW TO START A MERCHANT
ACCOUNT
 STEP 1: Research merchant account options from banks
in local area.
 STEP 2: Apply for the merchant account, providing all
necessary documentation and information.
 STEP 3: Submit to the bank a detailed list of the type of
business activities you conduct.
 STEP 4: Show proof of a website to the bank, if you are
conducting business online.
 STEP 5: Pay the application fee and any other required
upfront fees for setting up the merchant account.

13. REQUIRED DOCUMENTS
Business checking account
Proof of identification
Social security number or federal employer
identification number
Detailed statement of business activities
Tax returns and financial statements for business
Website(for online business)
Secure check out system(for online business)

14. HOW TO APPLY FOR MERCHANT
ACCOUNT
 STEP 1: Check your credit history and rating before
applying for a merchant.
 STEP 2: Apply for an internet merchant account, if you
want to process transactions online.
 STEP 3: Enter your business name, address and phone
numbers.
 STEP 4: Provide your company details.
 STEP 5: List the type of services provided.
 STEP 6: Provide information about yourself as the
business owner.
 STEP 7: Enter references, if required.
 STEP 8: Submit your application to the processor and
await a decision.

15. CATEGORIES OF MERCHANT BANKERS
CATEGORY ROLE
CATEGORY 1 •Issue management
•Advisor
•Consultant
•Manager
•Underwriter
•Portfolio manager
CATEGORY 2 •Advisor
•Consultant
•Manager
•Underwriter
•Co-manager
CATEGORY 3 •Underwriter
•Advisor
•Consultant
CATEGORY 4 •Advisor
•Consultant

16. QUALITIES OF MERCHANT BANKERS
Ability to analyse
Abundant knowledge
Ability to build up relationship
Innovative approach