INSTITUTE OF MANAGEMENT SCIENCES

(IMS)
LUCKNOW UNIVERSITY, LUCKNOW

A STUDY ON AWARENESS OF MERCHANT

BANKING
SESSION (2018-2020)

SUBMITTED TO SUBMITTED
BY DR NIMISHA KAPOOR KHUSHBOO
GUPTA

MBA (FC) 2 YEAR

SEMESTER- IV

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 DECLARATION

I, Khushboo Gupta , do hereby declare that the report “ A STUDY ON AWARENESS OF

MERCHANT BANKING” has been undertaken by me for the award of Master of Business
Administration.
I have completed this study under the guidance of Dr Nimisha kapoor, Institute of
Management Sciences, Lucknow University, lucknow .
I also declare that the project report has not been sumitted for the award of any Degree,
Diploma or fellowship or any other title in this University or any other University.

PLACE:LUCKNOW KHUSHBOO GUPTA

MBA (FC)-IV SEM
180012135245

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 ACKNOWLEDGEMENT
The successful accomplishment of this project work in the outcome of the contribution of
number of people, especially those who have given the time and effort to share their thoughts
and suggestions to improve the report.
At the beginning, I would like to pay my humble gratitude to the Almighty for giving me the
ability to work hard under pressure. However, the space me immense pleasure to thank a
large number of individuals for their cordial cooperation and encouragement who have
contributed directly or indirectly in preparing this project. I would like to special thanks to
OSD Prof. Manoj Agarwal of Institute of Management Science (IMS),Lucknow University
for their close supervision. This is a great pleasure for me to be assigned under the guidance
of Dr. Nimisha Kapoor of Institute of Management Science, Lucknow University. I am very
grateful to her for all his kind cooperation and guidance in preparing the project. His valuable
suggestions and guidelines helped me a lot to prepare this report in a well organised manner.
Finally, I would like to thank all those who have shared their views about my work, provided
me with necessary information, criticized me, and congratulated me. This acknowledgement
is not enough to tell them how profound the impact of their opinion is on this report, how
indebted I am to them. I express my heartiest gratitude to all of them.

Khushboo Gupta
MBA(FC)- 2 Year
SEM- IV

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 PREFACE
MBA Students of Lucknow University are required to undergo Research Project as an
integral part of Curriculum. To accomplish this project as “A STUDY ON AWARENESS
OF MERCHANT BANKING” there is need to become familiar with the project.
It can be possible through theoretical as well as practical exposure in which any practical
knowledge is helpful is helpful acquired at the college. I have also done this study from
secondary sources.

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 TABLE OF CONTENTS
Declaration
Acknowledgement
Preface
Executive summary

S.No Title Pg. No

1 INTRODUCTION 8-19

2 LITERATURE REVEIW 21

3 RESEARCH METHODOLOGY 23

4 DATA ANALYSIS AND INTERPRETATION 25-34

5 FINDINGS AND CONCLUSION 36-37

6 SUGGESTIONS 39

7 BIBILIOGRAPHY 40

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 EXECUTIVE SUMMARY
Although merchant banking activity was ushered in two decades ago, it was only in 1992
after the formation of Securities and Exchange Board of India that it is defined and a set of
rules and regulations in place. Today a merchant banker is who has the ability to
merchandise that is, create or expand a need and fulfil capital requirements.

 I have given an overview about the financial markets and the role of merchant
bankers in the growth of these markets
 My project covers how the merchant banks works, rules & regulations laid by SEBI
& its impact on the merchant banking activities.
 Their importance in the economy is expected to grow even further in the coming
years with an increasing proportion of household savings getting invested in corporate
& other securities.
 Hence, my project covers the challenges and advantages, which India will get and is
getting by merchant banking activities.
 I have covered several services provided by Merchant Bankers & the role of
Merchant bankers in providing those services to the business world.
 Finally, the top players, which exist in merchant banking, are also covered; their
services are also been focused.

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 CHAPTER-1
INTRODUCTION

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The term Merchant Banking has its origin in the trading methods of countries in the late
eighteenth and early nineteenth century when trade-taking place was financed by bill of
exchange drawn by merchanting houses. At that time the merchants were merely financing
their own activities. As international trade grew and other lesser known names wanted to
import goods from abroad, the established merchants ‘lent their names’ to the newcomers by
agreeing to accept bills of exchange on their behalf. The acceptance houses would charge a
commission for this service and thus there grew up the business of accepting bills of finance
trade not merely of themselves, but of others. Acceptance business thus became and to a
degree always has been hallmark of true Merchant Banks.

The second historical of Merchant Banks was the raising of capital for foreign Government.
In many cases, the Merchant Banks have been trading in the countries concerned and gained
the confidence of Governments and other authorities in those countries. Thus the second
principal ingredient of Merchant Banking became and still is rising of capital through the
issue of stocks and bonds. Therefore, Merchant Banks can be accepting houses or issuing
houses or both. Merchant Banking started in the beginning of 20 th century in UK and USA.
More recently, the services offered by Merchant Banks have entered into the other areas of
operations. Their role is wide ranging and they can now provide most of the financial
services required by a company, touching almost all aspects of establishing and running of
industrial units on sound financial footing.

Dictionary meaning of ‘merchant bank’ refers to an organization that underwrites corporate

securities and advises such clients on issues like corporate mergers, etc. Involved in the
ownership of commercial ventures. This organization may be a bank, corporate body, firm or
proprietary concern.

 HISTORY OF MERCHANT BANKING

During the seventeenth and most of the eighteenth century international finance was centred
on Amsterdam. Consequently Amsterdam merchants became the first masters of the various
financial techniques and developments which, in the course of time, became identified with
the emergent profession of ‘Merchant Bankers’.

Commercial Banking and Investment Banking are often confused with Merchant Banking. In
many ways, there may be similarities in their functions. However, in certain ways, Merchant
Banking is distinctly different from commercial Banking and Investment Banking.

The primary function of a commercial bank is to receive deposits from the public and lend
the same to others. Commercial Banks can undertake some of the merchant banking activities
like Issue Management whereas Merchant Banking Units can not undertake commercial
banking activities. However, the functions of Merchant Banking may not widely vary from
Investment Banking. The Merchant Banker mainly deals with Issue Management, post issue
services, corporate adviser services etc. The Investment Banker undertaken trading in
securities, Investment advises and bought out deals which are not the main activities of
Merchant Bankers.

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 In today’s Scenario the Merchant banker and management consultants undertake advisory
services to the corporate sector. The Merchant Banker advices corporation and firms relating
to opening of issues, receiving loans etc., which the management consultants also do. The
management consultant has wide area operations like production, Marketing, Personnel
Relations, of finance etc. But they lack statutory recognition to undertake capital market
related activities which has enabled the merchant banker to cater to the needs of the
Corporate Sector.

A merchant bank may be considered as an institution which centres its operation on all or
most of the following activities.
(1) Corporate financial advice, on such diverse matters as new share and bond issues, capital
reconstructions, mergers and acquisitions;
(2) The taking of deposits and currency, money market operations including foreign exchange
dealing;
(3) Medium-term lending and syndication of loans;
(4) Acceptance credits and all forms of export finance;
(5) The holding and dealing in quoted and unquoted investment; and
(6) Fund management on behalf of clients, most typically pension funds, unit trust, investment
trusts and wealthy individuals

 DEFINITION

The first authoritative definition for the term ‘Merchant Banker’ has been given in the
Rule 2 (e) of SEBI (Merchant Bankers) Rules, 1922. Accordingly, “A Merchant Banker
means any person who is engaged in the business of Issue Management either by making
arrangements regarding selling, buying or subscribing to Securities as Manager, Consultant,
Adviser of rendering Corporate Advisory Service in relation to such Issue Management”.

Sec/5 (b) of the Banking Regulation Act, 1949 defines Banking as “accepting, for the
purpose of lending or investment of deposits of money from the public, repayable on demand
or otherwise and withdrawal by cheque, draft, order or otherwise”.

The Notification of the Ministry of Finance defines a merchant banker as, “any person who is
engaged in the business of issue management either by making arrangements regarding
selling, buying or subscribing to the securities as manager, consult, adviser or rendering
corporate advisory service in relation to such issue management”.

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MERCHANT BANKING: PAST AND PRESENT

Many banks entered merchant banking in the 1960s to take advantage of the economies of
scope produced when private equity investing is added to other bank services, particularly
commercial lending. As lenders to small and medium-sized companies, banks become
knowledgeable about individual firms’ products and prospects and consequently are natural
providers of direct private equity investment to these firms. As mentioned above, commercial
banks were the largest providers of venture capital in the 1960s. In the middle to late 1980s,
the decision to enter merchant banking was thrust on other banks and bank holding
companies by unforeseen events. In those years, as a result of the LDC (less-developed-
country) debt crisis, many banks received private equity from developing nations in return for
their defaulted loans. At that time, many of these banks set up merchant banking subsidiaries
to try to get some value from this private equity.

Also at about that time, most commercial banks began refocusing their private equity
investments to middle-market and public companies (often low-tech, already profitable
companies) and, rather than providing seed capital, financed expansion or changes in capital
structure and ownership. Most particularly, they took equity positions in lobs, takeovers, or
recapitalizations or provided subordinated debt in the form of bridge loans to facilitate the
transaction. Often they did both. Commercial banks financed much of the LBO activity of the
1980s.Then, in the mid-1990s; major commercial banks began once again focusing on
venture capital, where they had substantial expertise from their previous exposure to this kind
of investment. Some of these recent venture-capital investments have been spectacularly
successful. For example, the Internet search engine Lycos was a 1998 investment of Chase
Manhattan’s venture-capital arm. Commercial banks are permitted to report either realized or
unrealized gains on their merchant-banking portfolios, as long as they are consistent in the
reporting. This option makes it difficult for one to compare different entities’ financial results
and could lead to an overly liberal reporting of profits.

NEED & IMPORTANCE IN INDIA

 Important reason for the growth of merchant banking is due to exerting excess demand on
the sources of funds forever expanding industry and trade.
 Corporate sector had the only alternative to avail of the capital market services for
meeting their long-term financial requirements through capital issues of equity and
debentures.
 With the growing demand for funds there was pressure on capital market that enthused
the commercial banks, share brokers and financial consultancy firms to enter into the
field of merchant banking and share the growing capital market.
 In India have opened their merchant banking windows and are competing in this field,
and also doing advisory functions as merchant bankers as well as managing public issues
in syndication with other merchant bankers.
 Merchant banks can play highly significant role in mobilizing funds of savers to
investible channels assuring promising return on investments. Activity.

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 With the growth of merchant banking profession corporate enterprises in both public and
private, sectors would be able to meet the growing requirements for the funds for
establishing new enterprises, undertaking expansion/modernization/diversification of the
existing enterprises.
 Merchant banks have been procuring impressive support from capital market for the
corporate sector for financing their projects.
 In view of multitude of enactments, rules and regulations, guidelines and offshoot press
release instructions brought out by the Government from time to time imposing
statutory obligations upon the corporate sector to comply with all those requirements
prescribed therein, the need of skilled agency existed which could provide counselling.
 Merchant bankers advise the investors of the incentives available in the form of tax
reliefs, other statutory relaxations, and good return on investment and capital appreciation
in such investment to motivate them to invest their savings in securities.
 Thus, the merchant bankers help industry and trade to raise funds, and the investors to
invest their saved money in sound and healthy concerns with confidence, safety and
organizations for higher yields.

GROWTH OF MERCHANT BANKING IN INDIA

Formal merchant banking activity in India was originated in 1969 with Merchant
Banking Division set up by the Grind lays Bank, the largest foreign bank in the country.
The main service offered at that time to the corporate enterprises by the merchant banks
included the management of public issues and some aspects of financial consultancy.
Other foreign banks like Citi Bank, Chartered Bank also assumed the merchant banking
activity in India. State Bank of India started merchant banking in 1973 followed by
ICICI in 1974. Both these Indian merchant bankers emerged as leaders in merchant
banking having done significant business during the period of 1974-1987 in comparison
to foreign banks. The early and mid-seventies witnessed a boom in the growth of
merchant banking organizations in the country with various commercial banks, financial
institutions, and broker’s firms entering in to the field of merchant banking.

The early growth of merchant banking in the country is assigned to the Foreign Exchange
Regulation Act, 1973 (FERA) where under large number of foreign companies operating in
India were required to dilute their foreign holdings in order to continue business in the
country. This had caused two-pronged effect viz. Firstly, in the form of spate in ‘Foreign
Exchange Regulation Act Issues’ eliciting interest of the investors by creating massive
awareness about capital markets amongst the new class of investing public, secondly,
merchant banking activity became attractive to banks and the firms of consultants and share
brokers who entered into this fields vigorously to reap the advantages of the expanding
capital markets.

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PROBLEMS OF MERCHANT BANKERS

1. SEBI guidelines have authorized merchant bankers to undertake issue related

activities only with an exception of portfolio management. These guidelines have made
the merchant bankers either to restrict their activities or think of separating these
activities from the present one and float new subsidiary and enlarge the scope of its
activities.

2. SEBI guidelines stipulate a minimum net worth of Rs.1 crore for authorization of
merchant bankers. Small but professional and specialized merchant bankers who do not
have a net worth of Rs.1 crore may have to close down their business. The entry is
denied to young, specialized professionals into merchant banking business.

Non co-operation of the issuing companies in timely allotment of securities and refund of
application money is another problem of merchant bankers. The guidelines have put the
responsibility on the merchant bankers. They have to seek the cooperation of the issuing
company to shoulder the responsibility

CURRENT SCENARIO

Merchant banking is an area that we need to build and grow in the years to come. As
India forms part of the global village, it becomes increasingly necessary for us to look at
this business in a more holistic manner.

Obviously, international players with strong domestic partners such as DSP Merrill
Lynch, JM Morgan Stanley, Kotak Mahindra Capital, together with experienced
organisations like Enam and institutional backed investment bankers such as ICICI
Securities, etc., are the ones who have expertise, muscle, and placement power in a
greater measure than relatively new entrants.

The red hot economy is the obvious starting point. India is likely to end the year with
GDP growth in excess of 7 percent. Companies and private equity investors are sitting
on large piles of cash. In 2006 deal activity was largely restricted to the IT and Telecom
sectors.

Thus while there is a steady flow of deals, there is now a shortage of talent to do the job.

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  Merchant banker registered with SEBI:

Public Sector: Commercial banks (24), Financial Institutions (6), State

Institutions (4)

Private sector: -International bankers (10), Banks (10), finance & investment
(231)

 Broadly a merchant banker can provide the following services:

1. Corporate Counselling
2. Project Counselling And Pre-Investment Studies
3. Credit Syndication And Project Finance
4. Issue Management
5. Underwriting
6. Bankers
7. Portfolio Management
8. Venture Capital Financing
9. Leasing
10. Non-Resident Investment Counselling And Management
11. Acceptance Credit And Bill Discounting
12. Advising On Mergers, Amalgamations And Take-Over
13. Arranging Offshore Finance
14. Fixed Deposit Broking
15. Relief To Sick Industries

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 MERCHANT BANKING-FUTURE DEVELOPMENT

Time and again the Merchant banking Industry in India witnessed experienced and
underwent significant changes. The very purpose for which these firms are commences
their services should be taken care of and they should mould their policy decision and
activities to move in tune with the main objectives of Investor’s protection and to create
healthy environment in capital markets. No doubt, Merchant Banking firms are subject
to a host of control measures, regulations and rules framed and guided by SEBI. To
some extent, frequent changes and /or amendments to policies and control measures,
though needed for smooth working of the securities Industry, proves to be detrimental to
the very existence of the Merchant Banking system in the country. The SEBI’s Act
1992 confers power upon SEBI to supervise and control the affairs of the Merchant
Banking firms in India.
The various studies which had been undertaken in India for evaluating the performance
of Merchant Banking firms and the implications of these on securities industry. No
single study has been emerged so far pertaining to the evaluation of Merchant Banking
firms and in-depth study on their activities as well as operational and financial
performance in the light of changing regulatory environment.

By the end of the decade, the securities market in India came to be firmly integrated with
the financial system of the country. With the corporate sector increasingly relying on the
securities market for meeting their long-term requirement of funds, the securities market
their long-term requirement of funds; the securities market competed on equal terms
with the Development Financial Institutions, which were the traditional purveyors of
long-term capital. The emergence of the securities markets into the main stream of the
financial system of the country was thus one of the major economic processes of the
1980s – an inevitable outcome of the maturing process of the financial system. They
brought about notable changes in the capital structure of the companies across industries,
gave birth to new intermediaries and institutions in the securities market and created a
new awareness and interest in investment opportunities in the securities market among
investor. In spite market, its quality lagged far behind and there was absence of adequate
professionalism and fair competition among the various players in the market. Besides,
the regulatory framework then prevailing was fragmented difficult, if not effective.

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 BRIEF ANALYSIS OF SOME MERCHANT BANKS OF INDIA

 SBI Bank of India

 ICICI Bank Ltd.

 Punjab National Bank

 Union Bank of India

 Kotak Mahindra

 IDBI BANK

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 SBI Merchant Banking Group is strongly positioned to offer
perfect financial solutions to your business. We specialize in
the arrangement of various forms of Foreign Currency Credits
for Corporate.

OUR PRODUCTS AND SERVICES

 Arranging External Commercial Borrowings (ECB)

 Arranging and participating in international loan syndication

 Loans backed by Export Credit Agencies

 Foreign currency loans under the FCNR (B) scheme

 Import Finance for Indian corporate

SBI CAPITAL MARKETS LIMITED

(SBICAPS) is India's leading investment bank and project advisor, assisting domestic
company’s fund-mobilization efforts for last many years.

We began operations in August 1986 as a wholly owned subsidiary of the State Bank of
India, which is the largest commercial bank in India. In January 1997, fresh equity shares
were issued to Asian Development Bank (ADB) and ADB now holds 13.84% stake in the
equity of SBICAPS. The distinguished parentage (with a 86.16% stake) together with the
long standing association of an internationally renowned financial institution like the Asian
Development Bank further enhances our image as a truly 'World Class Investment Bank'.

 Position in the domestic banking sector as on 31 March 2008:

 15.44% of the aggregate deposits.
 15.28 % of total advances.
 The only Indian Bank to find a place in the Fortune Global 500 List.
 First Indian Bank to take up merchant banking in 1986.

SBI Capital Markets Limited:

 No. 1 in Asia – Pacific for Project Advisory. Rating by Thomson Project Finance
International.
 No. 1 in IPO’s, managed 700+ issues (since 1989 – source Prime Database).

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  The only Indian Merchant Banker in the
Global 10, Thomson Project Finance
International 2007.
 Pioneer in Privatization.

You see, ICICI Bank is India's #2 bank (after State Bank of India), with more than 600
branches and 2,200 ATMs nationwide. ICICI's retail banking group offers lending and
deposit services to small businesses and individuals. Larger businesses are served by the
corporate banking group, which offers finance services and treasury products. ICICI's rural
and government banking unit offers micro-loans and agricultural banking. Foreign
operations, as well as services related to international trade finance and expatriate Indians,
fall under the international banking group. Other ICICI offerings include online banking,
asset management, and insurance.

ICICI Advice on Wide Varity of Product:

 Private Equity Financing

 Secondary sale transactions

 pre IPO deals

ICICI Securities Ltd is the largest equity house in the country providing end-to-end solutions
(including web-based services) through the largest non-banking distribution channel so as to
fulfil all the diverse needs of retail and corporate customers. ICICI Securities (I-Sec) has a
dominant position in its core segments of its operations - Corporate Finance including Equity
Capital Markets Advisory Services, Institutional Equities, Retail and Financial Product
Distribution.

ICICI Securities Inc., the step-down wholly owned US subsidiary of the company is a
member of the National Association of Securities Dealers, Inc. (NASD). As a result of this
membership, ICICI Securities Inc. can engage in permitted activities in the U.S. securities
markets. These activities include Dealing in Securities and Corporate Advisory Services in
the United States and providing research and investment advice to US investors.

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is a SEBI Registered CAT-1 Merchant banker.
ICICI Securities Inc. is also registered with the
Financial Services Authority, UK (FSA) and
the Monetary Authority of Singapore (MAS).

Punjab National Bank (PNB) is one of India's largest nationalized banks with some 4,500
branches or service counters. The financial institution offers services in personal and
corporate banking, including industrial, agricultural, and export finance, as well as
international banking. Its personal lending services include loans for housing, autos, and
education. PNB's diverse client list includes Indian conglomerates, small and mid-sized
businesses, non-resident Indians, and multinational companies. The bank was established in
Lahore in 1895 -- before the country was partitioned into India and Pakistan in 1947.

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Union Bank of India has been around for more than 88 years. The bank has earned a
reputation for being techno-savvy--more than 600 branches of Bank are networked and

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powered with a centralized technology platform, the
bank also manages close to 395 networked ATMs.

Union Bank is a Public Sector Unit with 55.43%

Share Capital held by the Government of India. The Bank came out with its Initial Public
Offer (IPO) in August 20, 2002 and Follow on Public Offer in February 2006. Presently
44.57 % of Share Capital is presently held by Institutions, Individuals and Others.

Products and Services

 Personal Banking (Accounts & Deposits, Retail Loans, Cards, Insurance &
Investment, Demat )
 NRI Banking(Remittance, Savings & Deposits, Loan & Services, Payments)
 Corporate Banking(CMS, E-Tax, Insurance, Trade Finance, loans Syndication,
MSME Banking)
 Internet Banking(Account Information, Transfer of Funds/Bills/Limits/Currency.
Financial & Non Financial enquiries)

Awards:

 The Bank was awarded the Gold Trophy and a certificate in the Elite Class for
Excellence in Marketing & Brand Communication by Association of Business
Communicators of India (ABCI) in March 2010. The award was given away by the
Hon’ble Governor of Maharastra, Shri K.Sankaranarayan.
 The Bank was awarded the prestigious “Skoch Challenger Award” 2009 for
excellence in capacity building through innovative concept of “Village Knowledge
Centre” as part of financial inclusion initiatives. The award was given away by Dr. C
Rangarajan, Economic advisor to the Prime Minister
th
 As part of its global expansion initiatives, the Bank opened its 5 overseas
representative office in London, U.K. in April 2010. The Bank already has 4
representative Offices in Shanghai, Beijing in PRC, Abu Dhabi in UAE and Sydney,
Australia. Besides the Bank has a full fledged overseas branch in Hong Kong. The
Bank is the process of setting up a Rep Office in Toronto, Canada.

Kotak Mahindra is one of India's leading financial conglomerates, offering

complete financial solutions that encompass every sphere of life. From

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commercial banking, to stock broking, to mutual
funds, to life insurance, to investment banking,
the group caters to the financial needs of individuals and corporates.

Kotak Securities Ltd. 100 % subsidiary of Kotak Mahindra Bank is one of the
oldest and largest broking firms in the Industry. A subsidiary of Kotak
Mahindra bank. Reconstruction from a private company to a public limited
company effective from June 13, 2003. Act as a lead manager to several (IPO’s)
& help in Client in accessing the public & private equity market.

It is also a depository participant with National Securities Depository Limited

(NSDL) and Central Depository Services Limited (CDSL).

Large Presence: At present Kotak in 331 cities with 843 offices all over the
country.

Services :-

 Stock broking through the branch and Internet,

 Investments in IPO,
 Mutual funds
 Portfolio management service,
 Currency Derivatives,
 Insurance.

Finance Asia Award (2009)-Best Brokerage Firm In India

Best Brokerage Firm in India by Asia money in 2008, 2007 & 2006

Best Performing Equity Broker in India – CNBC Financial Advisor Awards

2008

IDBI Capital Market Services Ltd., (IDBI Capital) is a wholly owned subsidiary of IDBI
Bank Ltd and is a leading Investment Banking & Securities Company.

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IDBI Capital offers a full suite of products and services to Corporates, Institutional and
Individual clients.

IDBI Capital Market Services Ltd. (ICMS) is a leading Fund Manager in the country for
Provident, Pension and Retirement Benefit Funds. The Company is a SEBI registered
Portfolio Manager and manage its Client’s assets under both discretionary and non-
discretionary mandates. These services are provided to various public and private sector
undertakings and their provident, pension, retirement benefit and surplus funds. The
Company’s client base includes leading pension and provident funds in the country.

IDBI capital has been advising institutions, banks and corporates for their investment in
Debt, Mutual Funds and Equities over several years. Its services include managing Client
Assets--Pension & Provident Funds, Surplus fund Management, Equity Portfolio
Management and Mutual Fund Advisory.

Service’s:-

 Retail Broking & Distribution

 Online Investing
 IPO Distribution
 Capital Markets
 IPO / FPO / Right Issues
 Takeover
 Buyback of Securities
 Qualified Institutional Placement
 Private Equity
 Investment Banking
 Financial Advisory
 Project Advisory
 Corporate Advisory
 Mergers & Acquisitions
 Strategic Advisory
 Institutional Broking & Distribution
 Equity Sales & Dealing
 Equity Research
 Mutual Fund Sales & Dealing
 Mutual Fund Research

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 CHAPTER-2
LITERATURE REVIEW

Sanjeev Kumar (2016): Merchant banking is financial institutions which provide capital to
the company in the form of share ownership.it also providing advice to the corporate sector
in which they invest money. Merchant banking is in not only advisor but also principle.
Merchant banking has a long-term approach than investment. It provides right advice to each
client. Merchant banking is a traditional term it also describes the private equity. Merchant

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banking helps in the corporate sector which reflects into economic development of the
country.
Merchant banking provide various function like portfolio management, underwriting,
counselling, loan syndication. Merchant banking is combination of banking and consultancy
services.
Waghmare Shivaji (2015): Globalization made whole Indian economy open which has a
multiple role in the financial services. Now a day’s government open the door of investment
in the area of insurance and bank. Which provide competitive environment for present
player? Merchant banking is an innovative term introduced by commercial bank. The need
for the merchant banking is pronounced by banking commission (1972). Merchant banking
offer fee-based and non-fee-based services like loan syndication, underwriting, project
promotion, advisory to small and medium savers. In India merchant banking work under
SEBI.
Dr. Singh and Dr. Saxena (2017): Merchant banking consists of wide range of financial
activities and financial institution. Merchant bank called “Accept and issue house”. Because
merchant banking acting as broker and principle. Merchant banking has a long-term approach
concerned with each investment opportunity and provides right advice to each client of the
company. Merchant banking is a service provided by many financial institutions to increase
growth of corporate sector which reflect into Indian economy. Merchant banking is a
combination of consultancy services and banking.
Dr. Jyoti Lahoti (2016): Merchant banking is service provided by financial institution which
helps in the economic development of the country. Merchant banking provides various
services like portfolio management, loan syndication, and issue management. Merchant
banking is a combination of consultancy services and banking. It helps in the business unit. It
also helps to increase the fund and to expand the business.
CS Gowtham (2017): Merchant banking issue share, debentures, bank loan to their clients.
This finance is used for new business or to expand the business, to modify the business.
Merchant banking not only provides finance but also provide right path with respect to SEBI.
Shreyas B.S: Merchant banking consist of wide range of financial activities. Merchant bank
is called “Accepting and issuing house” Merchant banking is rapidly growing in Indian
economy. The SEBI which gives overall view of present and past. Merchant banking is
oldest in the primary market and it has bright future in coming years.
Farzana Huda (2017): Merchant banking plays vital role in economic development. It is
observed that merchant bank is able to achieves growth in investment sector like brokerage,
capital loss/ gain, portfolio management, issue management, advisory fees. This study
analyse the performance of prime finance ,capital management.

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 CHAPTER-3
RESEARCH
METHODOLOGY

BACKGROUND OF THE STUDY

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 A. OBJECTIVES:
 To develop the ability to study the functioning of Merchant Banking in India &
learn & apply multidisciplinary concepts, tools & techniques to solve vital
problems.
 To familiarize with the various services provided by Merchant Bankers.
 To compare the public & private sector company engaged in providing merchant
banking services on various grounds.
 To find out the growth potential of the Merchant Banking public & private sector
companies.
 To understand the rights & duties of a merchant banker and his contributions to
the overall banking system.

B.THE STUDY: The study is primarily based upon the functioning of merchant banking
companies. The study would have information and details of merchant banking of public
and private sector companies and then an analysis will be done on the collected
information.

C.THE SAMPLE: Sample size would be 7-8 public and private sector companies.

D.TOOLS FOR DATA COLLECTION:

 Primary Data usually consists of the data that are collected afresh for the first time
and thus is original in character. Primary Data that used in the study
▪ Information gathered from various banks
▪ Questionnaire
In my Questionnaire, there are 10 Questions
 Secondary Data consists of data that is collected from some existing literature. It
has been already analysed by someone else earlier and is derived from that source.
Secondary Data that used in the study are

▪ Newspapers
▪ Websites
▪ Books

E.LIMITATIONS OF THE STUDY:

1. The study is based on secondary data. So the limitations of secondary data may
also creep in and have an impact on the present study also.
2. Due to paucity of time only limited information can be collected
3. Study would be confirmed to only 7-8 public and private sector merchant banking
companies.
4. The customers may not feel the need to answer certain questions as per their
convenience.

26
 CHAPTER-4
DATA INTERPRETATION AND
ANALYSIS

27
Q 1 Do you take any financial services from bank?

Sr. Take Financial

No. Service Nos. Percentage
1 Yes 12 40
2 No 18 60

  Total 30  100

GRAPH

Take Financial Services

40%
Yes
No

60%

Interpretation

Out of total respondents, 40% respondents have taken Financial Service and rest

60% respondents have not taken the Financial Services.

Q 2 Do you know about Merchant Banking?

28
 Sr. Know about
No. Merchant Nos. Percentage
1 Yes 10 33.33
2 No 20 66.67

  Total 30  100

GRAPH

Know about Merchant Banking

33%

Yes
No

67%

Interpretation:

Out of total respondents, 33% respondents Know about merchant banking and
rest 67% respondents don’t know about merchant banking.

29
Q 3 Are you satisfied with the services provided by your bank?

Sr.
No. Satisfied Nos. Percentage
1 Yes 13 43.75
2 No 17 56.25

  Total 30 100

GRAPH

SATISFIED
60

50

40

30 SATISFIED

20

10

0
YES NO

Interpretation:

Out of total respondents, 43.75% respondents are satisfied and rest 60%
respondents are not satisfied.

Q4 Are you satisfied with services offered by banks?

30
 Sr. No Bank Percentage
1 ICICI 20
GRAPH 2 SBI 35
3 PNB 20
4 BOI 15
5 Other 10

PERCENTAGE
ICICI SBI PNB BOI OTHER

10
20

15

20
35

Interpretation:

 Large number prefers services from SBI.

31
Q 5 What is the position of Merchant Banking in Private Sector?

Sr. No. Position Percentage

1 Good 50
2 Normal 35
3 Bad 15
  Total 100

GRAPH

POSITION
GOOD NORMAL BAD

15%

50%

35%

Interpretation:

Out of total respondents, 50% respondents Say Good, 35% Say Normal and rest

15% respondents say Bad.

32
Q 6 What is the position of Merchant Banking in Public Sector?

Sr. No. Position Percentage

1 Good 40
2 Normal 55
3 Bad 5
  Total 100

GRAPH

POSITION
5%

GOOD
42% NORMAL
BAD

53%

Interpretation:

Out of total respondents, 40% respondents Say Good, 55 % Say Normal and
rest 5% respondents say bad.

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Q7 What type of security have you deposited/you will deposit with the banks?

Sr. No. Type of Security Nos. Percentage

1. Bank Security (F.D.) 7 22.5
2. Gold 0 0
3. Land Papers 19 62.5
4. Third person security 4 15
Total: 30 100

GRAPH

70

60

50
bank sec.
40 gold
land paper
30 third person

20

10

0
bank sec. gold land paper third person

Interpretation:

Out of total respondents, a large number have deposited/will deposit land

papers.

Q 8 Are you satisfied by Security margin of bank?

34
 Sr. No. Satisfaction by Security Margin Nos. Percentage
1. Yes 24 80
2. No 6 20
Total: 30 100

GRAPH

SATISFACTION BY MARGIN LEVEL

90

80

70

60
Yes
50 No
40

30

20

10

0
Yes No

Interpretation

Out of total respondents, 80% respondents are satisfied and rest 20%
respondents are not satisfied.

Q 9 Are you satisfied with timely services provide by banks?

Sr.
No. Depends on M.B Nos. Percentage
1 Yes 21 75

35
2 No 9 25

  Total 30 100

GRAPH

90

80

70

60
Yes
50 No
40

30

20

10

0
Yes No

Interpretation

Out of total respondents, 75% respondents Say that they are timely heard and
rest 25% say that they are not timely served by merchant banking.

Q10 Will it differ from investment banks?

Sr.
No. Difference Nos. Percentage
1 Yes 23 75

36
2 No 7 25

  Total 30 100

GRAPH

60

50

40

30 Yes No

20

10

0
Yes No

Interpretation

Out of total respondents, 75% respondents think that it differs and rest 25%
respondents don’t think so.

37
 CHAPTER-5
FINDINGS AND
CONCLUSION

PUBLIC & PRIVATE SECTORS

Public Sector is the pioneer in providing Merchant Banking services in India.

But due to liberalization of economy the scenario has changed many private
Merchant Banking companies have entered in the industry since then.

38
Public sector merchant banking companies facing stiff competition from the
private sector companies.

Market Share

Public Sector= 66%

Private Sector= 34%

GRAPH

PERCENTAGE

34%
PUBLIC SECTOR
PRIVATE SECTOR

66%

39
 CONCLUSION
The merchant banker plays a vital role in channelizing the financial surplus of the society
into productive investment avenues. Hence before selecting a merchant banker, one must
decide, the services for which he is being approached. Selecting the right intermediary who
has the necessary skills to meet the requirements of the client will ensure success.

It can be said that this project helped me to understand every details about Merchant
Banking and in future how it’s going to get emerged in the Indian economy. Hence,
Merchant Banking can be considered as essential financial body in Indian financial system.

Market development is predicted on a sound, fair and transparent regulatory

framework. To sustain the growth of the market and crystallize the growing awareness and
interest into a committed, discerning and growing awareness and interest into an essential to
remove the trading malpractice and structural inadequacies prevailing in the market, and
provide the investors an organized, well regulated market.

This study helped me to understand details of merchant banking. The services provided by
merchant bankers to their customer such as loan syndication, portfolio management,
underwriting, counselling etc. They also work as a intermediary to share issue. All merchant
banks are registered under security exchange board of India (SEBI). Merchant banking helps
to grow Indian economy. Hence merchant banking is essential body in Indian financial
system

40
 CHAPTER-6
SUGGESTION

41
 SUGGESTIONS
On the basis of conclusion of whole study, opinions expressed by various professional,
articles of various newspapers problem of capital market and major finding and observation
of the study we suggest various safeguards for making the merchant banking facilities more
useful
Suggestion- it is necessary to adopt best practices of corporate governances for all the market
intermediaries including merchant bankers. Effective implementation corporate governance
is the only solution for most of the problems of corporate sector in specific and for capital
market intermediaries in particular.
 The board should retain full and effective control over the company and monitor
executive management
 No single individual should have unfettered powers of decision making
 The board should have formal schedule of matter specifically reserved to it for
decision making to ensure that the direction and control of the company is
numbers

The world is still learning the best way and the best extent of regulations of financial
services. In the freer economies the initial attempt was to deregulate financial services- make
All markets including foreign markets accessible to all. But the world is learning the lesson
that complete deregulation of financial services may bring about calamities which break the
borne of investor confidence
Merchant banking activities have become an essential tool for development of Indian
financial sector. It is vast and varied range of functions that makes this industry as not
ignorable aspect of the economy. But during the study Mumbai was found as only favourable
and fit destination from while country for merchant banking community due to its all
infrastructural facilities. In order to spread the expertise and expand the base of merchant
banking activities government of India should develop as many destinations across the
country on the lines of Mumbai so that savings of investors from unaccessed areas can be
channelized and corporate can get more findings for their projects that will ultimately lead to
an inclusive growth of the economy.

42
 BIBLIOGRAPHY
Reference Material

 Financial Institutions & Market By Shashi K. Gupta, Nisha Aggarwal

 Merchant Banking – H.R. Machiraju

 The Rise of Merchant Banking – Stanley Chapman

 The Merchant Bankers – Joseph Wechsberg

INTERNET

www.google.com/news

www.answer.com

www.emissarycapital.com

www.wikipedia.com

www.sebi.gov.in

http://unionbankofindia.co.in

http://www.asialaw.com/Article/1988860/Merchant-Banking.html

http://www.icicisecurities.com

http://www.sbicaps.com

http://www.bobcapitalmarkets.com

http://www.pnbindia.in/subsidiaries

http://www.kotaksecurities.com

http://www.canmoney.in

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