Merchant banking provides non-fund based financial services like advising on mergers and acquisitions, underwriting securities issuances, and portfolio management. It originated in Italy and England in the 12th-18th centuries and was formally introduced to India in 1967. Merchant banking plays an important role in the growing Indian economy by facilitating corporate fundraising and restructuring, project financing, and connecting companies to capital markets.
This presentation covers Merchant Banking History; Categories; Services provided by them; Methods of placement; underwriting; Issue management & SEBI guidelines.
Government securities are debt instruments issued by the government to raise funds. They include treasury bills and bonds. Government securities are considered low-risk as they are backed by the government's taxing power. They are issued to fund government expenditures and control the money supply. Types of government securities include dated securities, zero-coupon bonds, floating rate bonds, and bonds with call/put options. While government securities offer assured returns, their returns are generally lower than other securities and investors may lose value if interest rates rise.
1. Merchant banking provides valuable non-banking financial services such as corporate finance, portfolio management, underwriting shares, and project counseling in exchange for fees.
2. Merchant banking originated from merchants in London who financed foreign trade and helped underdeveloped governments raise funds.
3. Merchant banking in India is regulated by SEBI and provides intermediary services between companies needing capital and investors.
The document discusses various aspects of the new issue market in India including initial public offerings (IPO) where firms issue stock to the public for the first time, and seasoned equity offerings (SEO) where already public firms issue additional stock. It covers the key functions of origination, underwriting, and distribution in new stock issues. It also discusses the roles of various intermediaries that facilitate new issues such as merchant bankers, brokers, and underwriters.
The document provides an overview of the Indian financial system and its key components. It discusses the formal and informal financial sectors in India. The formal financial system includes financial institutions, markets, instruments, and services. It describes some of the major financial institutions in India as well as money markets and capital markets. It also summarizes some common financial instruments and services that make up the Indian financial system.
Factoring and forfeiting are mechanisms for financing exports. Factoring involves purchasing a company's accounts receivables to provide working capital, while forfeiting involves discounting export bills or promissory notes without recourse to the exporter. There are benefits to both exporters and importers such as improved cash flow, risk mitigation, and access to longer term financing. The key differences are that factoring is for ongoing domestic or export sales while forfeiting is for single export transactions backed by letters of credit or guarantees.
The document discusses the Indian capital market. It has two segments - the primary market where new securities are first issued to investors, and the secondary market which is the stock exchange where existing securities are traded. The key functions of the capital market are to mobilize savings, facilitate capital formation and economic growth. It discusses various instruments like equity shares, bonds, and methods of issuance like IPO, right issue, bonus issue etc. Important participants include brokers, banks, mutual funds. The regulator is SEBI and it oversees raising of capital and trading according to guidelines.
This presentation covers Merchant Banking History; Categories; Services provided by them; Methods of placement; underwriting; Issue management & SEBI guidelines.
Government securities are debt instruments issued by the government to raise funds. They include treasury bills and bonds. Government securities are considered low-risk as they are backed by the government's taxing power. They are issued to fund government expenditures and control the money supply. Types of government securities include dated securities, zero-coupon bonds, floating rate bonds, and bonds with call/put options. While government securities offer assured returns, their returns are generally lower than other securities and investors may lose value if interest rates rise.
1. Merchant banking provides valuable non-banking financial services such as corporate finance, portfolio management, underwriting shares, and project counseling in exchange for fees.
2. Merchant banking originated from merchants in London who financed foreign trade and helped underdeveloped governments raise funds.
3. Merchant banking in India is regulated by SEBI and provides intermediary services between companies needing capital and investors.
The document discusses various aspects of the new issue market in India including initial public offerings (IPO) where firms issue stock to the public for the first time, and seasoned equity offerings (SEO) where already public firms issue additional stock. It covers the key functions of origination, underwriting, and distribution in new stock issues. It also discusses the roles of various intermediaries that facilitate new issues such as merchant bankers, brokers, and underwriters.
The document provides an overview of the Indian financial system and its key components. It discusses the formal and informal financial sectors in India. The formal financial system includes financial institutions, markets, instruments, and services. It describes some of the major financial institutions in India as well as money markets and capital markets. It also summarizes some common financial instruments and services that make up the Indian financial system.
Factoring and forfeiting are mechanisms for financing exports. Factoring involves purchasing a company's accounts receivables to provide working capital, while forfeiting involves discounting export bills or promissory notes without recourse to the exporter. There are benefits to both exporters and importers such as improved cash flow, risk mitigation, and access to longer term financing. The key differences are that factoring is for ongoing domestic or export sales while forfeiting is for single export transactions backed by letters of credit or guarantees.
The document discusses the Indian capital market. It has two segments - the primary market where new securities are first issued to investors, and the secondary market which is the stock exchange where existing securities are traded. The key functions of the capital market are to mobilize savings, facilitate capital formation and economic growth. It discusses various instruments like equity shares, bonds, and methods of issuance like IPO, right issue, bonus issue etc. Important participants include brokers, banks, mutual funds. The regulator is SEBI and it oversees raising of capital and trading according to guidelines.
Presentation On Mutual funds and its typesGurmeet Virk
The document summarizes a seminar presentation on mutual funds and their types. It defines a mutual fund as a trust that pools investor savings and invests in stocks, bonds, and other securities. It outlines the history of mutual funds in India in four phases from 1964 to the present. It also describes the different types of mutual funds based on maturity period (open-ended or closed-ended) and investment objectives (growth, income, balanced, money market, gilt, and index funds). Finally, it lists some major Indian mutual fund companies and the advantages of investing in mutual funds.
The document discusses the money market in India. It defines the money market and notes that it deals in short-term financial instruments that can be easily converted to cash. Some key aspects of the Indian money market discussed include the various sub-markets (e.g. call money market), instruments (e.g. treasury bills), participants (e.g. commercial banks), and the role of the money market in providing short-term funds and allowing central bank control of liquidity.
Merchant banking provides capital to companies through equity investment rather than loans. It offers advisory services on corporate matters and investment banking services like mergers and acquisitions. Merchant banking started in Italy and France in the 17th-18th centuries and modern merchant banking began in London by financing foreign trade through bill acceptance. In India, merchant banking was introduced by Grindlays Bank in 1967 and other Indian and foreign banks subsequently established merchant banking divisions. Merchant banks invest their own capital and provide services primarily to large corporations and high-net-worth individuals rather than retail banking.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Basel I, II, and III are agreements that established regulatory standards for bank capital adequacy. Basel I, established in 1988, focused on credit risk and set minimum capital requirements of 8% of risk-weighted assets. Basel II, released in 2004, included three pillars: Pillar I established a revised minimum capital framework; Pillar II covered supervisory review; and Pillar III addressed market discipline through disclosure. It recommended a minimum ratio of total capital to risk-weighted assets of 8% and prescribed the minimum capital adequacy ratio of 9% for India. Basel III, finalized in 2017, strengthened bank capital requirements in response to the 2008 financial crisis.
The document summarizes the roles and functions of the Securities and Exchange Board of India (SEBI). It discusses that SEBI was established in 1988 by the Government of India and was upgraded to a statutory board in 1992. It describes SEBI's objectives to protect investor interests and promote fair practices in securities markets. The document outlines SEBI's regulatory functions such as registration of intermediaries and prohibition of unfair trade practices. It also discusses SEBI's developmental functions like investor education and research. The powers and departments of SEBI are presented. Recent regulatory cases involving Vedanta-Cairn and Deccan Chronicle Holdings are also summarized.
The document discusses India's depository system. It begins by outlining problems with physical share certificates like theft, delays, and paperwork. It then summarizes the Depositories Act of 1996 which established depository services in India. Depositories dematerialize physical shares and allow for electronic trading and transfer of shares. Major players in India's depository system are the National Securities Depository Limited and Central Depository Services (India) Limited. Benefits of the depository system include safety, immediate transfers, and reduced costs.
The document discusses underwriting, which is an agreement where underwriters take on the risk of purchasing securities from an issuer in the event that the public demand is insufficient. It describes different types of underwriting arrangements and the roles and responsibilities of underwriters. It also outlines the eligibility criteria, registration process, operational guidelines, and record keeping requirements for underwriters according to SEBI regulations in India. As an example, it summarizes that Alibaba's 2014 IPO raised over $20 billion with six major banks serving as equal lead underwriters.
This chapter discusses the major international financial markets known as the Euromarkets. It covers the Eurocurrency markets, Eurobonds, Note Issuance Facilities, and Euro-commercial paper. The Eurocurrency market is composed of eurobanks that accept deposits in foreign currencies, dominated by US dollars. Eurobonds are bonds sold outside the country of the currency's denomination, often US dollars, and have grown substantially due to interest rate swaps. Note Issuance Facilities allow borrowers to issue their own notes placed by banks as a low-cost substitute for loans. Euro-commercial paper are unsecured short-term debt securities denominated in US dollars and issued by corporations and governments.
A mutual fund pools money from many investors to purchase stocks, bonds, and other securities. It is managed by a professional fund manager who invests the money on behalf of the investors. A mutual fund provides diversification, affordable investment options, and convenience for investors. It allows individuals to hold a diversified portfolio of securities by investing small amounts of money alongside other investors. The first mutual fund in India was launched in 1964 by the Unit Trust of India (UTI).
The document discusses money markets and money market instruments. It defines a money market as a market for short-term financial instruments with maturities of less than one year. Money market instruments allow borrowers to access short-term funds and provide liquidity to lenders. Some key money market instruments discussed include treasury bills, commercial paper, certificates of deposit, commercial bills, and repurchase agreements. The money market plays an important role in economic development by facilitating the flow of funds.
The document provides an overview of the Indian financial system. It discusses the key components of the financial system including financial assets, institutions, markets, and their various functions. It describes the major financial institutions in India like banks, mutual funds, insurance companies. It also explains various financial instruments in the money market and capital market that enable raising and deployment of funds. The document presents diagrams to illustrate the structure and flow of funds within the Indian financial system.
1) Venture capital is financing provided to startup companies and small businesses with uncertain chances of success. It typically involves taking equity stakes in companies and providing guidance to management.
2) One of the earliest organized venture capital funds was formed in 1946 to provide startup financing, including to Digital Equipment Corporation in 1958.
3) Venture capital financing occurs in stages from early seed funding through expansion and later stage financing as a company grows and requires additional capital. Venture capitalists aim to earn returns primarily through capital gains when companies are successful.
NSDL was established in 1996 in Mumbai to create a national infrastructure for the electronic settlement of securities using international standards. It maintains investor holdings electronically, facilitates the electronic allotment of IPOs, and allows securities to be used as collateral for loans. Major participants include banks like HDFC, global custodians, and brokers. NSDL reduces paperwork and costs while preventing lost, stolen, or forged certificates to provide benefits for both investors and companies.
Mutual funds pool money from investors and invest it in stocks, bonds, and other securities. The money earned through investments and any capital appreciation is shared by unit holders proportionate to how many units they own. The document discusses the history of mutual funds in India from 1964 to present. It describes open-ended and closed-ended funds, as well as growth, income, balanced, and money market funds. The advantages of mutual funds include diversification, professional management, convenience, and tax benefits, while the disadvantages include costs and lack of control. Systematic investment plans allow regular investing of small amounts to achieve long-term goals through rupee cost averaging and the power of compounding.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
Merchant banking originated in London through merchants extending financial activities. It is defined as an institution covering activities like portfolio management, credit syndication, and insurance. In India, the need for merchant banking arose with rapid growth in primary market issues. Early merchant banking services in India were offered by foreign banks like Grindlays and Citibank. Merchant banking deals with equity and management, while commercial banking deals with debt and risks avoidance. Merchant banking services include corporate counseling, project counseling, loan syndication, issue management, underwriting, and portfolio management. Merchant banking has significant scope in India due to the growing new issues market, foreign investment, changing policies, debt market development, and corporate restructuring needs.
This document provides an overview of merchant banking services. It defines merchant banking and traces its origins in London financing foreign trade. Merchant banking services include project counseling, loan syndication, issue management, underwriting public issues, portfolio management, advising on NRI investment, mergers and acquisitions, and offshore finance. They help raise funds for projects, market corporate securities to the public, insure companies issuing public stock, manage investor portfolios, and facilitate foreign investment.
This document provides an overview of commercial banks. It defines commercial banks as financial institutions that accept deposits, make business loans, and offer basic investment products. It notes that central banks oversee commercial banking systems and impose conditions like reserve requirements. The document then describes the primary functions of commercial banks as receiving deposits and advancing loans. It also outlines various agency, general utility, and other roles commercial banks play in promoting economic growth.
This document provides an overview of the merchant banking sector in India. It discusses the evolution of merchant banking in India since 1969. It defines the key terms like merchant banking and investment banking. It describes the various functions of merchant bankers like corporate counseling, project counseling, issue management, portfolio management etc. It also discusses the regulatory framework for merchant bankers in India as laid out by SEBI, including the categories of merchant bankers and their capital adequacy requirements. In conclusion, it discusses some recent developments and challenges in the Indian merchant banking sector.
1) Merchant banking originated from merchant houses in the 18th-19th centuries financing international trade through bills of exchange. Over time, merchant banks took on roles of accepting bills of exchange, raising capital for foreign governments, and providing various financial services.
2) In India, merchant banking services were introduced by foreign banks in the 1960s-1970s and specialized merchant banking institutions were established in the 1970s in response to growing corporate financing needs.
3) Merchant banks play an important role in India by mobilizing funds for corporate and industrial development and advising corporations on issues like capital raising and mergers and acquisitions.
Presentation On Mutual funds and its typesGurmeet Virk
The document summarizes a seminar presentation on mutual funds and their types. It defines a mutual fund as a trust that pools investor savings and invests in stocks, bonds, and other securities. It outlines the history of mutual funds in India in four phases from 1964 to the present. It also describes the different types of mutual funds based on maturity period (open-ended or closed-ended) and investment objectives (growth, income, balanced, money market, gilt, and index funds). Finally, it lists some major Indian mutual fund companies and the advantages of investing in mutual funds.
The document discusses the money market in India. It defines the money market and notes that it deals in short-term financial instruments that can be easily converted to cash. Some key aspects of the Indian money market discussed include the various sub-markets (e.g. call money market), instruments (e.g. treasury bills), participants (e.g. commercial banks), and the role of the money market in providing short-term funds and allowing central bank control of liquidity.
Merchant banking provides capital to companies through equity investment rather than loans. It offers advisory services on corporate matters and investment banking services like mergers and acquisitions. Merchant banking started in Italy and France in the 17th-18th centuries and modern merchant banking began in London by financing foreign trade through bill acceptance. In India, merchant banking was introduced by Grindlays Bank in 1967 and other Indian and foreign banks subsequently established merchant banking divisions. Merchant banks invest their own capital and provide services primarily to large corporations and high-net-worth individuals rather than retail banking.
This document provides an overview of fund-based financial services. It discusses six main types of fund-based services: 1) leasing, 2) hire purchase, 3) consumer credit, 4) factoring, 5) venture capital financing, and 6) housing finance. For each type, it provides definitions, key features, and advantages. The overall purpose is to classify and explain different methods of providing structured financing that is secured or supported by company assets.
Basel I, II, and III are agreements that established regulatory standards for bank capital adequacy. Basel I, established in 1988, focused on credit risk and set minimum capital requirements of 8% of risk-weighted assets. Basel II, released in 2004, included three pillars: Pillar I established a revised minimum capital framework; Pillar II covered supervisory review; and Pillar III addressed market discipline through disclosure. It recommended a minimum ratio of total capital to risk-weighted assets of 8% and prescribed the minimum capital adequacy ratio of 9% for India. Basel III, finalized in 2017, strengthened bank capital requirements in response to the 2008 financial crisis.
The document summarizes the roles and functions of the Securities and Exchange Board of India (SEBI). It discusses that SEBI was established in 1988 by the Government of India and was upgraded to a statutory board in 1992. It describes SEBI's objectives to protect investor interests and promote fair practices in securities markets. The document outlines SEBI's regulatory functions such as registration of intermediaries and prohibition of unfair trade practices. It also discusses SEBI's developmental functions like investor education and research. The powers and departments of SEBI are presented. Recent regulatory cases involving Vedanta-Cairn and Deccan Chronicle Holdings are also summarized.
The document discusses India's depository system. It begins by outlining problems with physical share certificates like theft, delays, and paperwork. It then summarizes the Depositories Act of 1996 which established depository services in India. Depositories dematerialize physical shares and allow for electronic trading and transfer of shares. Major players in India's depository system are the National Securities Depository Limited and Central Depository Services (India) Limited. Benefits of the depository system include safety, immediate transfers, and reduced costs.
The document discusses underwriting, which is an agreement where underwriters take on the risk of purchasing securities from an issuer in the event that the public demand is insufficient. It describes different types of underwriting arrangements and the roles and responsibilities of underwriters. It also outlines the eligibility criteria, registration process, operational guidelines, and record keeping requirements for underwriters according to SEBI regulations in India. As an example, it summarizes that Alibaba's 2014 IPO raised over $20 billion with six major banks serving as equal lead underwriters.
This chapter discusses the major international financial markets known as the Euromarkets. It covers the Eurocurrency markets, Eurobonds, Note Issuance Facilities, and Euro-commercial paper. The Eurocurrency market is composed of eurobanks that accept deposits in foreign currencies, dominated by US dollars. Eurobonds are bonds sold outside the country of the currency's denomination, often US dollars, and have grown substantially due to interest rate swaps. Note Issuance Facilities allow borrowers to issue their own notes placed by banks as a low-cost substitute for loans. Euro-commercial paper are unsecured short-term debt securities denominated in US dollars and issued by corporations and governments.
A mutual fund pools money from many investors to purchase stocks, bonds, and other securities. It is managed by a professional fund manager who invests the money on behalf of the investors. A mutual fund provides diversification, affordable investment options, and convenience for investors. It allows individuals to hold a diversified portfolio of securities by investing small amounts of money alongside other investors. The first mutual fund in India was launched in 1964 by the Unit Trust of India (UTI).
The document discusses money markets and money market instruments. It defines a money market as a market for short-term financial instruments with maturities of less than one year. Money market instruments allow borrowers to access short-term funds and provide liquidity to lenders. Some key money market instruments discussed include treasury bills, commercial paper, certificates of deposit, commercial bills, and repurchase agreements. The money market plays an important role in economic development by facilitating the flow of funds.
The document provides an overview of the Indian financial system. It discusses the key components of the financial system including financial assets, institutions, markets, and their various functions. It describes the major financial institutions in India like banks, mutual funds, insurance companies. It also explains various financial instruments in the money market and capital market that enable raising and deployment of funds. The document presents diagrams to illustrate the structure and flow of funds within the Indian financial system.
1) Venture capital is financing provided to startup companies and small businesses with uncertain chances of success. It typically involves taking equity stakes in companies and providing guidance to management.
2) One of the earliest organized venture capital funds was formed in 1946 to provide startup financing, including to Digital Equipment Corporation in 1958.
3) Venture capital financing occurs in stages from early seed funding through expansion and later stage financing as a company grows and requires additional capital. Venture capitalists aim to earn returns primarily through capital gains when companies are successful.
NSDL was established in 1996 in Mumbai to create a national infrastructure for the electronic settlement of securities using international standards. It maintains investor holdings electronically, facilitates the electronic allotment of IPOs, and allows securities to be used as collateral for loans. Major participants include banks like HDFC, global custodians, and brokers. NSDL reduces paperwork and costs while preventing lost, stolen, or forged certificates to provide benefits for both investors and companies.
Mutual funds pool money from investors and invest it in stocks, bonds, and other securities. The money earned through investments and any capital appreciation is shared by unit holders proportionate to how many units they own. The document discusses the history of mutual funds in India from 1964 to present. It describes open-ended and closed-ended funds, as well as growth, income, balanced, and money market funds. The advantages of mutual funds include diversification, professional management, convenience, and tax benefits, while the disadvantages include costs and lack of control. Systematic investment plans allow regular investing of small amounts to achieve long-term goals through rupee cost averaging and the power of compounding.
The document discusses underwriting of shares and debentures, including what underwriting is, types of underwriting agreements, underwriting commission provisions, and journal entries related to underwriting. It provides learning objectives, definitions, examples, and explanations of various underwriting concepts such as conditional underwriting, firm underwriting, marked and unmarked applications, and how to determine underwriter liability. Worked examples are included to illustrate underwriting calculations.
Merchant banking originated in London through merchants extending financial activities. It is defined as an institution covering activities like portfolio management, credit syndication, and insurance. In India, the need for merchant banking arose with rapid growth in primary market issues. Early merchant banking services in India were offered by foreign banks like Grindlays and Citibank. Merchant banking deals with equity and management, while commercial banking deals with debt and risks avoidance. Merchant banking services include corporate counseling, project counseling, loan syndication, issue management, underwriting, and portfolio management. Merchant banking has significant scope in India due to the growing new issues market, foreign investment, changing policies, debt market development, and corporate restructuring needs.
This document provides an overview of merchant banking services. It defines merchant banking and traces its origins in London financing foreign trade. Merchant banking services include project counseling, loan syndication, issue management, underwriting public issues, portfolio management, advising on NRI investment, mergers and acquisitions, and offshore finance. They help raise funds for projects, market corporate securities to the public, insure companies issuing public stock, manage investor portfolios, and facilitate foreign investment.
This document provides an overview of commercial banks. It defines commercial banks as financial institutions that accept deposits, make business loans, and offer basic investment products. It notes that central banks oversee commercial banking systems and impose conditions like reserve requirements. The document then describes the primary functions of commercial banks as receiving deposits and advancing loans. It also outlines various agency, general utility, and other roles commercial banks play in promoting economic growth.
This document provides an overview of the merchant banking sector in India. It discusses the evolution of merchant banking in India since 1969. It defines the key terms like merchant banking and investment banking. It describes the various functions of merchant bankers like corporate counseling, project counseling, issue management, portfolio management etc. It also discusses the regulatory framework for merchant bankers in India as laid out by SEBI, including the categories of merchant bankers and their capital adequacy requirements. In conclusion, it discusses some recent developments and challenges in the Indian merchant banking sector.
1) Merchant banking originated from merchant houses in the 18th-19th centuries financing international trade through bills of exchange. Over time, merchant banks took on roles of accepting bills of exchange, raising capital for foreign governments, and providing various financial services.
2) In India, merchant banking services were introduced by foreign banks in the 1960s-1970s and specialized merchant banking institutions were established in the 1970s in response to growing corporate financing needs.
3) Merchant banks play an important role in India by mobilizing funds for corporate and industrial development and advising corporations on issues like capital raising and mergers and acquisitions.
Basic elements of planning and decision makingICAB
This document discusses organizational goal setting and planning. It covers the purposes of goals in providing guidance, promoting planning, motivating employees, and enabling evaluation. Goals can be set at different levels, such as mission, strategic, tactical, and operational goals. Planning involves determining objectives, actions, resources, and implementation. Effective planning requires identifying what needs to be done, how, and when. Different types of plans include strategic, tactical, operational, contingency, and crisis management plans. Barriers to planning like improper goals, rewards, and resistance must be addressed.
The document discusses merchant banking, including its origin, services provided, and regulations. It began with merchants financing foreign trade through bill acceptance in London. Merchant bankers now provide services like project counseling, loan syndication, issue management, portfolio management, M&A advisory, and offshore finance. They are regulated by SEBI and must meet requirements for authorization category, capital adequacy, code of conduct, and more. While merchant banking offers many services, high capital norms and issuer non-cooperation pose challenges.
Merchant banking has evolved over the past few decades in India. It was formally defined and regulated in 1992 by the Securities and Exchange Board of India (SEBI). Merchant bankers play an important role in facilitating capital raising for companies and supporting the growth of financial markets. The document discusses the history and evolution of merchant banking in India. It also outlines the various services provided by merchant bankers like managing public issues, advising on mergers and acquisitions, and providing post-issue support to companies. The key roles and regulations governing merchant banking in India are also highlighted.
The document discusses merchant banking, defining it as financial institutions that offer advice and services to corporations and wealthy individuals, including accepting bills of exchange, corporate finance, and portfolio management. It lists the key services merchant banks provide such as corporate counseling, project counseling, credit syndication, issue management and underwriting. The document also notes that merchant banks include foreign banks, Indian banks, financial institutions, and private merchant banks.
The document defines merchant banking and outlines its key services. Merchant banking originated in Europe to finance foreign trade and was introduced to India in 1967. It primarily provides financial advice and services to large corporations, engaging in activities like corporate counseling, project financing, portfolio management, and mergers and acquisitions. Unlike commercial banks, merchant banks do not provide regular banking services but instead focus on investment banking activities in primary markets. The document lists major public and private sector as well as foreign merchant banking institutions operating in India.
Merchant banking refers to a wide range of financial services including underwriting shares, portfolio management, project counseling, and insurance provided by both commercial and investment banks for a fee. Merchant bankers act as intermediaries between companies raising funds and investors by advising on issues like corporate mergers and underwriting corporate securities. They provide services like promotional activities, issue management, credit syndication, project counseling, portfolio management, and working capital finance to help businesses obtain financing.
Merchant banks are financial institutions that provide specialized non-deposit taking banking services like corporate financing, mergers and acquisitions advisory, project financing, and securities underwriting. They work with large corporations and do not provide retail banking services to the general public. Merchant banks deal extensively in international finance and business loans. They help companies raise funds through private placements, debt/equity offerings, and provide other advisory services. Unlike investment banks, merchant banks do not underwrite and sell securities to the public through IPOs.
Brief information about merchant banking institutions in india, meaning,
Origin, capital adequacy requirement, category of merchant banks, merchant bank services etc...
Merchant banking refers to a range of financial services including underwriting shares, portfolio management, project counseling, and insurance provided by both commercial and investment banks for a fee. Merchant bankers play an important role as intermediaries between companies raising funds and investors. They perform various functions such as promotional activities, issue management, credit syndication, project counseling, portfolio management, and mergers and acquisitions. Merchant banking activities in India are regulated by the Securities and Exchange Board of India (SEBI). Other key players in the capital markets include underwriters, bankers to an issue, brokers to an issue, and registrars and share transfer agents.
Merchant banking involves a wide range of financial services including underwriting shares, portfolio management, project counseling, and insurance. Merchant banks facilitate production, trade, and financing by raising capital from investors for companies. They advise companies on fundraising and corporate mergers/acquisitions. To act as a merchant banker, one must be registered with the Securities and Exchange Board of India and meet certain capital adequacy and operations requirements. Merchant bankers help companies with various financial functions like project promotion, issuing securities, credit syndication, and portfolio management. They are regulated to protect investors and maintain high standards of conduct.
Merchant banking refers to a range of financial services including underwriting shares, portfolio management, project counseling, and insurance provided by commercial and investment banks for a fee. Merchant banks act as intermediaries between companies raising funds and investors. They advise on corporate mergers and underwritings, help structure securities issues, and arrange financing from financial institutions and capital markets. To operate as a merchant banker in India, one must register with the Securities and Exchange Board of India and meet certain capital adequacy and operational capability requirements.
Financial services can be defined as the products and services offered by institutions like banks for various financial transactions and money management. They include activities that transform savings into investment and provide capital market services, money market services, retail services, and wholesale services. Financial services are intangible, customer-oriented, simultaneous in production and delivery, perishable, proactive, link investors and borrowers, and aid in distributing risks. They include fund-based activities like underwriting shares and bonds, money market instruments, and foreign exchange, as well as fee-based activities like managing capital issues and advising corporate clients. Financial services are important because they support vibrant capital markets, expand financial activities, benefit governments, promote economic development and growth, maximize
Merchant banking provides a wide range of financial services including underwriting shares, portfolio management, project counseling, and more. They work with both equity and debt financing unlike commercial banks. Some key services include corporate counseling, project financing, managing public offerings, portfolio management, M&A advisory, offshore financing, and advising non-resident investors. Merchant banks must have expertise in financial analysis, market knowledge, and maintain high professional standards. The merchant banking industry in India has opportunities to grow with the increasing number of public offerings, foreign institutional investments, evolving debt markets, and corporate restructuring needs.
A merchant bank provides a wide range of financial services such as underwriting shares, portfolio management, project counseling, credit syndication, and insurance. They facilitate international transactions for multinational corporations. For example, a US company wanting to acquire a German company would hire a merchant bank to advise on structuring the transaction and assist with financing. Merchant banks must be authorized by the Securities and Exchange Board of India (SEBI) and meet capital adequacy requirements to operate in India.
Issue management intermediaries- P. SAI PRATHYUSHA (PONDICHERRY UNIVERSITY)SaiLakshmi115
This document provides an overview of merchant banking in India, including:
1. It defines merchant banking and discusses the major intermediaries in the new issue market such as merchant bankers, lead managers, underwriters, and others.
2. It explains the different categories of merchant bankers registered with SEBI and the registration process.
3. It outlines the various functions performed by merchant bankers such as issue management, portfolio management, corporate counseling, credit syndication, and others.
Financial services refer to services provided by banks and other financial institutions, including mobilizing and allocating savings, providing loans, insurance, investment products, and more. Some key types of financial institutions discussed are commercial banks, cooperative banks, and non-banking financial institutions. Financial markets allow for short-term lending and capital raising. Financial instruments can be primary, secondary, short-term, long-term or medium-term. Financial services are classified as fund-based, involving direct investment of funds, or fee-based, where institutions earn fees through specialized services.
Financial services encompass a broad range of organizations that manage money, including banks, credit unions, insurance companies, stock brokerages, and investment funds. Financial services perform several important functions: facilitating transactions in the economy, mobilizing savings, allocating capital funds, monitoring managers, and transforming risk. Financial services activities can be categorized as traditional fund based activities like money market instruments, equipment leasing, and foreign exchange dealing or non-fund based activities like managing capital issues and arranging project financing. Modern financial service activities include advisory services, mergers and acquisitions planning, corporate restructuring, and hedging various risks through derivatives.
Development of financial institutions in NepalPawan Kawan
Financial institutions play a key role in the economy by facilitating transactions and the flow of money. In Nepal, there are various types of financial institutions that serve different functions:
- Commercial banks accept deposits and provide business loans and basic investment services. Nepal's first commercial bank was Nepal Bank Ltd.
- Development banks like the Nepal Development Bank Limited provide medium and long-term financing to support sectors like industry and agriculture.
- Other financial institutions in Nepal include finance companies, microcredit banks, cooperatives, and non-governmental organizations. As of 2012 there were over 300 registered financial institutions operating in Nepal.
Merchant banking provides specialist financial services including corporate finance, project counseling, capital restructuring, issue management, portfolio management, and more. It originated in Europe among Dutch and Scottish traders and developed further in Britain. Merchant banking involves a range of activities like corporate counseling, pre-investment studies, credit syndication, underwriting, and project appraisal. The key functions include advising companies, raising capital, managing public issues, and providing various financing options. Merchant bankers play an important role in facilitating business growth and development.
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Unit 3 com541-a
1. UNIT- 3
Merchant Banking
Banking services + Consultancy services
(Collect finance) (financial, marketing, managerial
& legal matters)
Haresh R
Asst. Professor
Dept of Commerce
Christ University
2. Introduction
• Basically a service banking.
• Provides non-fund based services (Fee Based)
• Arranges funds rather than providing them
• Intermediary in transferring capital from place of
surplus to deficit
• An institution which understands
Requirements of FIs, Banks, Stock xchange
entrepreneurs and money market
3. Merchant Banking: Origin
• Merchant Banking came into existence in 12th
century in Italy (Riccadi of Luca, Medici, Fugger)
• 17th and 18th century bills of exchange and money
market instruments introduced to English
businessmen by Italian Merchants.
• Merchant banking in the modern era started from
London; Merchants started to finance the foreign
trade through acceptance of bill.
4. • Till 1932 there was no distinction between
merchant banks and commercial banks. The
Glass-Steagall Act 1933 distinguished
(MB/IB from CB)
• 1987 commercial banks were permitted to
create subsidiaries for the purpose of
undertaking MB/IB activities in USA
• Merchant banks were known as “accepting &
issuing houses” in the UK and “Investment
banks” in USA.(Only difference in
nomenclature but not in functional aspects)
5. • Merchant Banking officially came to India
through ANZ Grindlays Bank in 1967 after
obtaining license from RBI (Management of
capital issue, financial services, market research,
management consultancy services)
• 1970 - Citibank merchant banking division.
6. • 1972 – SBI merchant banking division
• ICICI the first Pvt institution started MB service
in 1974.
• Many other banks came after this like Canara
Bank, UCO bank etc., started their operation.
7. • Forms of Merchant Banks
– Commercial banks & foreign development finance
institutions, nationalised banks through subsidiary
companies, sharebrokers and consultants in the
form of public or private limited companies,
collaborations with foreign merchant bankers.
8. Meaning of Merchant Banking
• a financial institution that provides capital to
companies in the form of share ownership instead
of loans.
• provides advisory on corporate matters to the
firms they lend to.
• In other words…
“Merchant bank refers to an organization that
underwrites securities and advises such clients on
issues like corporate mergers, involving in the
ownership of commercial ventures”.
9. Definition
According to SEBI (Merchant Bankers) Rules
1992, “A merchant banker has been defined as
any person who is engaged in the business of issue
management either by making arrangements
regarding selling, buying or subscribing to
securities or acting as manager, consultant
advisor or rendering corporate advisory services in
relation to such issue management”.
10. Merchant Bank Vs Commercial Bank
• CBs deal in debt and debt related finance. MBs
deal in equity and equity related finance.
• CBs avoid risk - credit analysis of loan proposals -
value of security offered – asset oriented. MBs
are management oriented and are willing to
accept risks.
• CBs are merely financiers. MBs undertake project
counseling, corporate counseling in areas of
capital restructuring, mergers, takeovers etc.,
11. Functions/Services of Merchant Banking
1. Corporate Counseling
2. Project Counseling
3. Pre investment studies
4. Capital Restructuring
5. Credit Syndication & Project Finance
6. Issue Management & underwriting
7. Portfolio Management
8. Working Capital Finance
12. 9. Acceptance of credit & bill discounting
10. Merger, Amalgamation & Takeover
11. Venture capital
12. Lease Financing
13. Foreign Currency Financing
14. Fixed Deposits Broking
15. Mutual Funds
13. Corporate Counseling
• A set of activities undertaken to ensure the efficient running
of a corporate enterprise is known as corporate counseling.
• A merchant banker guides the client on aspects of
– organizational goals
– vocational factors
– organization size
– choice of product
– demand forecasting
– cost analysis
– allocation of resources
– investment decisions
– capital and expenditure management
– marketing strategy
– pricing methods etc.
14. • Diagnosing sick units, assessing revival prospects
for rehabilitation, suggesting suitable strategy for
improving their production technology and
financial structure.
• Suggestions and opinions to the client and help
taking actions to solve their problems.
• It is provided to a corporate unit with a view to
ensure better performance, maintain steady
growth and create better image among investors.
15. Project Counseling
• Project counseling is the feasibility study of the
project with reference to various aspects such as
financial, economical, commercial technical etc.
• It includes
– preparing project reports
– finance for cost of project
– appraising projects from the angle of technical,
commercial and financial viability.
– getting approval of project from bank/Govt and other
agencies
– planning for public issue.
16. Pre-Investment Studies
• It is a detailed feasibility study to evaluate
alternative avenues of capital investment in
terms of growth and profit prospects.
– Analyzing environment and regulatory factors
– Identification of raw material sources
– Estimation of demand
– Estimation of financial requirements
17. Capital Restructuring Services
• Capital restructuring aims to reduce the cost
of capital and maximize the shareholders
wealth.
– Determination of optimum capital structure
conforming to legal requirements.
– Getting consent of controller of Capital issues for
capitalization of reserves by way of issuing bonus
shares.
– Here the Capital Structure is worked out i.e., the
capital required, raising of the capital, debt-equity
ratio, issue of shares and debentures, working
capital, fixed capital requirements, etc.,
18. Credit Syndication
• Credit Syndication refers to obtaining of loans
from single development finance institution or
a syndicate or consortium.
• credit procurement and project financing,
aimed at raising Indian and foreign currency
loans from banks and financial institutions.
19. Steps followed by MB - Clients - FIs
• MB first makes an appraisal of the project to satisfy that it is
viable
• He ensures that the project adheres to the guidelines for
financing industrial projects.
• It helps in designing capital structure, determining the
promoter‘s contribution and arriving at a figure of approximate
amount of term loan to be raised.
• After verifications of the project, the Merchant Banker
arranges for a preliminary meeting with financial institution.
• If the financial institution agrees to consider the proposal, the
application is filled and submitted along with other documents.
20. Issue Management and Underwriting
• Issue management and underwriting is concerned
with the activities of management of the public issues
of corporate securities, viz. equity shares, preference
shares, and debentures of bonds to procure money
from the capital market.
• Underwriting is a guarantee given by the underwriter
that in the event of under subscription, the amount
would be provided by him to the extent of under
subscription.
• All public issues are to be underwritten fully.
21. Portfolio Management
• Refers to investments in different kinds of securities such as
shares, debentures, bonds issued by different companies and
securities issued by the Govt.
• Merchant bankers advise about mix of investments a company
should follow to ensure maximum return with minimum risk.
– Providing advice on selection of investments.
– Carrying out a critical evaluation of investment portfolio.
– Collecting and remitting interest and dividend on
investment.
– Undertaking investment in securities.
– Safe custody of securities in India and overseas.
22. Working Capital Finance
• Working Capital finance is the fund required to meet
the day-today expenses of an enterprise.
• The related activities are:
– Assessment of working capital requirements.
– Facilitating sanction of credit facilities speedy
disbursements.
23. Merger and Acquisition
• The merchant banker arranges for negotiating
acquisitions and mergers by offering expert
valuation regarding the quantum and the nature
of considerations, and other related matters.
– Conducting SWOT analysis in order to help formulate
guidelines and directions for future growth.
– Conducting studies for locating overseas markets,
foreign collaborations and prospective joint venture
associates.
– Obtaining approvals from shareholders and other
stakeholders
– Monitoring the implementation of merger and
amalgamation schemes.
24. Lease Financing
• Leasing is one of the fund based financial
services of merchant banker. Leasing means
‘letting out assets on lease’ for use by the
lessee for a particular period of time.
Merchant banker provides the following
services:
– Providing advice on the viability of leasing
– Providing advice on the choice of a favorable
rental structure.
25. Foreign Currency Financing
• Foreign currency finance is the fund provided for foreign
trade transactions in the form of export-import trade
finance, euro currency loans.
– Assisting the study of turnkey project and construction of
contract projects.
– Liaison with RBI, EXIM, ECGC and other institutions.
– Providing assistance in opening and operating banks accounts
abroad.
– Assisting in obtaining export credit facilities and letter or credit.
– Providing guidance on forward cover for exchange risk.
– Arranging foreign currency guarantees.
– Arranging various types of foreign currency loans such as
Eurocurrency Loans, Syndication of Euro loans, Bank guarantees
etc.
26. Scope for Merchant Banks in India
The present capital market scenario provides a vast
scope for merchant banking in india. Below mentioned
point justify it clearly.
(i) Growth of new issue market – Due to unprecedented
growth in new issue market, MB’s has to play crucial role
in managing issue of shares & securities.
(ii) Entry of foreign investors – has further improved
their scope in India due to opening up Indian Capital
market in 1992 for foreign investors. Increasing number
of joint ventures abroad by Indian companies and further
increased this scope.
27. (iii) Changing policies of Financial Institutions –
From security orientation to project orientation has
given a further boost to MB’s as their services are
required for project preparation, appraisal and
getting the projects approved for getting finances.
(iv) Innovations in financial instrument – New
instruments are coming in capital market and MB’s
are market makers for those new instruments.
28. (v) Corporate restructuring – Due to increased
liberalization, globalisation and privatization,
competition in corporate sector is becoming
intense leading to corporate restructuring in the
form of merger, acquisition, take over,
necessitating the services of MB‟s.
(vi) Dis-investment – Policy of disinvestment in
public sector is opened up good scope for MB’s
in capital market.
29. The following are some of the reasons why
specialist merchant bank have a crucial role to
play in India.
• Growing complexity in rules and procedures of
the government.
• Growing industrialization and increase of
technologically advanced industries.
• Need for encouragement of small and
medium industrialists, who require specialist
services.
30. • Need to develop backward areas and states
which require different criteria.
• Exploring the possibility of joint ventures
abroad and foreign market.
• Promoting the role of new issue market in
mobilizing saving from.
31. Problems of merchant banks
1. Restrictions in scope of merchant banking
activities with focus only on issue related activities
and certain exceptions for portfolio management.
2. SEBI guidelines stipulate a minimum net worth
of Rs.1 crore for authorization of merchant bankers.
Difficulty for adhering such net worth norms by
small firms.
3. Non cooperation of the issuing companies in
timely allotment of securities and refund
application money is another problem of merchant
bankers.
32. 4. Unhealthy competition among large number of
merchant banks compels them to reduce their
profit margin, commission etc.
5. There is no exact regulatory framework for
regulating and controlling the working of merchant
banks in India.
6. Fraudulent and fake issue of share capital by the
companies are also posing problems for merchant
banks who act as lead manager or issue manager of
such issues.