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APPA
Institute Of Engineering And
Technology
Dept : MBA
: Regulations Of Merchant banking
Presentation on:
Submitted By:
Mahesh.patil
Submitted To:
prof. Shashikant.k
Introduction :
“ 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 which they
invest.
Regulations Of Merchant banking :
A merchant banker will require authorization by SEBI to
carry out the business.
SEBI has classified the merchant bankers into four
categories based on the nature and range of the
activities and responsibilities.
Category 1 :
It consists of merchant bankers who
carry on the business of issue management which
consists of preparation of issue management which
consists of preparations of prospectus, determining
the financial structure , tie-up of the financiers.
Minimum networth required is Rs. 1 crore.
Category : 2
It consists of those authorized to act in the capacity of
co-manager.
The Minimum networth required is Rs. 50 Lakhs
Category : 3
it
consists of those authorized to act as underwriter, advisor or consultant
to an issue.
The Minimum networth required is Rs. 20 Lakhs.
Category : 4
it consists of Merchant banker who act as
advisor or consultant to an issue.
There is no Minimum networth required.
SEBI GUIDELINES FOR MERCHANT
BANKERS
SEBI’s authorization is a must to act as merchant
bankers, includes:
 Professional qualification in finance, law or business management
 Infrastructure like office space, equipment and man power
 Capital adequacy
 Past track of record, experience, general reputation and fairness in all
transactions
 Every merchant banker should maintain copies of balance sheet, Profit
and loss account, statement of financial position
Cont….
 Half-yearly audited result should be submitted to
SEBI
 Merchant bankers are prohibited from buying
securities based on the unpublished price sensitive
information of their clients
 SEBI has been vested with the power to suspend or
cancel the authorization in case of violation of the
guidelines
 SEBI has the right to send inspecting authority to inspect
books of accounts, records etc… of merchant bankers
Conclusion :
merchant banking is difficult to define. The function
of merchant bankers varies from country to country. Merchant
banks are known as “Accepting and issuing houses” in UK and as
“investment banks” in USA
In India merchant bankers are allowed to undertake
only those activities which are related to securities market
including issue management activities and are prohibited
from carrying on fund based activities other than those
related exclusively to the capital market. This reduces the
scope of merchant banking in India.
Thank you

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Regulation of Merchant banking

  • 1. APPA Institute Of Engineering And Technology Dept : MBA : Regulations Of Merchant banking Presentation on: Submitted By: Mahesh.patil Submitted To: prof. Shashikant.k
  • 2. Introduction : “ 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 which they invest.
  • 3. Regulations Of Merchant banking : A merchant banker will require authorization by SEBI to carry out the business. SEBI has classified the merchant bankers into four categories based on the nature and range of the activities and responsibilities.
  • 4. Category 1 : It consists of merchant bankers who carry on the business of issue management which consists of preparation of issue management which consists of preparations of prospectus, determining the financial structure , tie-up of the financiers. Minimum networth required is Rs. 1 crore.
  • 5. Category : 2 It consists of those authorized to act in the capacity of co-manager. The Minimum networth required is Rs. 50 Lakhs Category : 3 it consists of those authorized to act as underwriter, advisor or consultant to an issue. The Minimum networth required is Rs. 20 Lakhs.
  • 6. Category : 4 it consists of Merchant banker who act as advisor or consultant to an issue. There is no Minimum networth required.
  • 7. SEBI GUIDELINES FOR MERCHANT BANKERS SEBI’s authorization is a must to act as merchant bankers, includes:  Professional qualification in finance, law or business management  Infrastructure like office space, equipment and man power  Capital adequacy  Past track of record, experience, general reputation and fairness in all transactions  Every merchant banker should maintain copies of balance sheet, Profit and loss account, statement of financial position
  • 8. Cont….  Half-yearly audited result should be submitted to SEBI  Merchant bankers are prohibited from buying securities based on the unpublished price sensitive information of their clients  SEBI has been vested with the power to suspend or cancel the authorization in case of violation of the guidelines  SEBI has the right to send inspecting authority to inspect books of accounts, records etc… of merchant bankers
  • 9. Conclusion : merchant banking is difficult to define. The function of merchant bankers varies from country to country. Merchant banks are known as “Accepting and issuing houses” in UK and as “investment banks” in USA In India merchant bankers are allowed to undertake only those activities which are related to securities market including issue management activities and are prohibited from carrying on fund based activities other than those related exclusively to the capital market. This reduces the scope of merchant banking in India.