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Merchant Banking

Merchant banking involves advising companies on raising capital and assisting with stock and debt issuances. [1] The document outlines the history and origins of merchant banking dating back to 13th century traders and bankers. [2] It then discusses the roles and responsibilities of modern merchant banks which include advising companies, underwriting stock offerings, and managing compliance with regulations. [3] The key objectives of merchant banks are to provide long-term funding to companies and high-quality advisory services while maintaining ethical standards and investor protection.

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Raghavendra.K.A
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1K views

Merchant Banking

Merchant banking involves advising companies on raising capital and assisting with stock and debt issuances. [1] The document outlines the history and origins of merchant banking dating back to 13th century traders and bankers. [2] It then discusses the roles and responsibilities of modern merchant banks which include advising companies, underwriting stock offerings, and managing compliance with regulations. [3] The key objectives of merchant banks are to provide long-term funding to companies and high-quality advisory services while maintaining ethical standards and investor protection.

Uploaded by

Raghavendra.K.A
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Merchant Banking

Meaning

A person or company involved in wholesale


trade, esp. one dealing with foreign countries or
supplying merchandise to a particular trade.
Origin of Merchant Banking
13th Century merchant bankers were traders of
commodities and acted as bankers to the kings
of European states.
They Financed the continental wars and
coastal trades.
They lent their names to lesser known
traders by accepting bills through which they
guaranteed that the holder of the bill would
receive full payment.
Managers to the issue or Merchant
Bankers
Advise on the capital structure, instrument of
issue.
Pricing
Assessing and appraisal of project report.
Appointment of bankers, underwriters,
brokers, registrars, printers and advertisement
agents.
Holding brokers-Underwriters,
Deciding the pattern of advertisement.
Deciding the collection branches where
application can be received or collected.
Deciding on the dates of opening and
closing of the subscription list.
Obtain daily report of the applications and
amounts collected at branches.
Obtaining subscription to the issue.
Obtain consent of the Stock Exchange and
get basis of allotment approved.
Factors to select a MB
Ethics and integrity.
Reputation.
Trained & committed manpower.
Concern & interest of clients.
Liaison and networking.
Relationship & Contacts.
Infrastructure.
Past performance.
Prime Objectives of MB
Providing long term funds to the projects or
companies.
Project counseling- loan syndication, project
appraisal and arrangement of Working
capital.
Deciding the capital structure.
Portfolio Management
Underwriting
Corporate advisory & issue mgmt.
SEBI (MB) Regulations, 1992
Code of Conduct for MB
Observe high standards of integrity and
fairness in all his dealings.
Render high standard of service, exercise
due diligence, proper care, exercise
independent judgment & disclose conflict
of interest while providing unbiased
service.
Code of conduct continued..
Not make any statement or become privy
to any act, practice or unfair competition,
likely to harm the interest of other MB or
is likely to place such other MB in a
disadvantageous position in relation to the
MB, while competing for or executing any
assignment. (Harmful statement while
solicitation & execution)
Not make exaggerated statements, written or
oral, to the client either about the qualification
or the capability to render certain services or
his achievements in regard to services rendered
to other clients.
Render best possible advice to the client
having regard to the clients needs and the
environment and his own professional skill;
Ensure that all professional dealings are
effected in a prompt, efficient and cost
effective manner.
A MB shall not divulge to other clients, press or
any other party any confidential information
about his client, which has come to his
knowledge.
Deal in securities of the client company without
making disclosure to the board as required under
the regulation and also to the Board of Directors
of the client company.
Provide investors with true and adequate
information without making any misguiding or
exaggerated claims and are aware of
attendant risks before any investment
decisions are made.
Ensure copies of prospectus,
memorandum and related literature are
made available to investors.
Fair allotment of securities and refund of
application money without delay.
Investor complaints are adequately dealt
with.
The MB shall not generally and particularly in
respect of issue of any securities be party to
Creation of false market
Price rigging or manipulation
Passing of price sensitive information or take
any other action which is unethical or unfair
to the investors.
A MB shall abide by the provisions of the
Act, rules and regulations which may be
applicable and relevant to the activities
carried on by the merchant banker.
SEBI (MB) Regulations 1992
Chapter I Preliminary
Chapter II Registration of MB
Chapter III General Obligations and
Responsibilities.
Chapter IV Procedure for Inspection.
Chapter V Procedure for Action in case of
Default.
Schedule 1 Forms
Form A Application for Grant of
Certificate/Renewal of Certificate.
Form B Certificate of Registration.
Form C Due diligence certificate.
Schedule 2 Fees
Schedule 3 Code for Merchant Bankers.
Qualities of a good MB
Leadership
Aggressive action
Co-operative and friendliness
Contacts
Attitude towards problem solving
Inquisitiveness for new skills, information and
knowledge

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