MERCHANT BANKING
INTRODUCTION
Merchant Banking is an emerging concept in the are of financial services in India. The profession of merchant banking is dedicated to fulfill the needs of trade & industries by acting as a intermediary consultant, liaison man & financer too.
MEANING
DEFINITION
“A Merchant Bank is defined as a financial institution or an organization that underwrites corporate securities & advices such clients on issue like corporate mergers etc. involved in the ownership of commercial ventures, etc.
This organization may be a bank corporate body, a firm or
proprietary concern. “
CLASSIFICATION OF MERCHANT BANKING
FEES BASED MERCHANT BANKING: These banks don’t take Balance Sheet Position i.e. these are only a service provider or in other words these are channel between two or more parties that comply each others requirements. e.g. – Public Issue…
FUND BASED MERCHANT: These banks take Balance Sheet Position. They initially provide funds to the client from their own resources in exchange of securities (bonds, debentures, equity…) & thereafter sell the same to the others. These banks function mostly when funds requirement by client is urgent. e.g. – bought out deal.
FUNCTIONS & SERVICES OF MERCHANT BANKS
CONSULTANCY SERVICES GOVERNMENT CONSENT PROJECT PLANNING & FEASIBILITY STUDY RAISING FINANCIAL RESOURCES
RAISING FINANCIAL RESOURCES ISSUE MANAGEMENT
PORTFOLIO MANAGEMENT
ADVICE ON EXPANSION PROGRAMME
LOAN SYNDICATION
CORPORATE RESTRUCTURING REVIVAL PACKAGES FOR SICK UNITS MISCELLANEOUS SERVICES
REGULATORY FRAME WORK FOR MERCHANT BANKING
AUTHORISATION AUTHORISED ACTIVITIES AUTHORISATION CRITERIA
TERMS OF AUTHORISATION
NATIONAL & GRINDLAYS BANK
1. Advice & liaison obtaining consent of the central & state governments for the project, if necessary. 2. Preparation of economic, technical & financial feasibility reports; 3. Initial project preparation, pre-investment surveys & market studies; 4. Help in raising rupee resources from financial institutions & commercial banks; 5. Underwriting & also for subscriptions if necessary, to the new issues or syndication of loans, etc. 6. Assistance in raising foreign exchange resources so as to enable the industrial concerns to import machinery & technical know-how & secure foreign collaboration.
7. Advice on setting up turnkey projects in foreign countries & locating foreign markets; 8. Help in financial management & in designing proper capital structure & debt-equity ratio etc. for the company;
9. Advice on restructuring of capital, amalgamation, mergers, takeovers, etc.;
10. Management of investment trusts, charitable trusts, etc.; 11. Managerial aid & entrepreneurial aid (management audit providing design of the complete system, operational research & management consultancy); 12. Recruitment (selection of technical & managerial personnel ), etc.
The merchant banking business has increased over a short period of time & with continued economic reforms. However, a stiff competition exists in this line & survival will depend upon the financial skills & spectrum of financial services & instruments offered by the merchant banker. Hence, merchant banking service are taking shape for turbulent times.
doc_350357315.pptx
INTRODUCTION
Merchant Banking is an emerging concept in the are of financial services in India. The profession of merchant banking is dedicated to fulfill the needs of trade & industries by acting as a intermediary consultant, liaison man & financer too.
MEANING
DEFINITION
“A Merchant Bank is defined as a financial institution or an organization that underwrites corporate securities & advices such clients on issue like corporate mergers etc. involved in the ownership of commercial ventures, etc.
This organization may be a bank corporate body, a firm or
proprietary concern. “
CLASSIFICATION OF MERCHANT BANKING
FEES BASED MERCHANT BANKING: These banks don’t take Balance Sheet Position i.e. these are only a service provider or in other words these are channel between two or more parties that comply each others requirements. e.g. – Public Issue…
FUND BASED MERCHANT: These banks take Balance Sheet Position. They initially provide funds to the client from their own resources in exchange of securities (bonds, debentures, equity…) & thereafter sell the same to the others. These banks function mostly when funds requirement by client is urgent. e.g. – bought out deal.
FUNCTIONS & SERVICES OF MERCHANT BANKS
CONSULTANCY SERVICES GOVERNMENT CONSENT PROJECT PLANNING & FEASIBILITY STUDY RAISING FINANCIAL RESOURCES
RAISING FINANCIAL RESOURCES ISSUE MANAGEMENT
PORTFOLIO MANAGEMENT
ADVICE ON EXPANSION PROGRAMME
LOAN SYNDICATION
CORPORATE RESTRUCTURING REVIVAL PACKAGES FOR SICK UNITS MISCELLANEOUS SERVICES
REGULATORY FRAME WORK FOR MERCHANT BANKING
AUTHORISATION AUTHORISED ACTIVITIES AUTHORISATION CRITERIA
TERMS OF AUTHORISATION
NATIONAL & GRINDLAYS BANK
1. Advice & liaison obtaining consent of the central & state governments for the project, if necessary. 2. Preparation of economic, technical & financial feasibility reports; 3. Initial project preparation, pre-investment surveys & market studies; 4. Help in raising rupee resources from financial institutions & commercial banks; 5. Underwriting & also for subscriptions if necessary, to the new issues or syndication of loans, etc. 6. Assistance in raising foreign exchange resources so as to enable the industrial concerns to import machinery & technical know-how & secure foreign collaboration.
7. Advice on setting up turnkey projects in foreign countries & locating foreign markets; 8. Help in financial management & in designing proper capital structure & debt-equity ratio etc. for the company;
9. Advice on restructuring of capital, amalgamation, mergers, takeovers, etc.;
10. Management of investment trusts, charitable trusts, etc.; 11. Managerial aid & entrepreneurial aid (management audit providing design of the complete system, operational research & management consultancy); 12. Recruitment (selection of technical & managerial personnel ), etc.
The merchant banking business has increased over a short period of time & with continued economic reforms. However, a stiff competition exists in this line & survival will depend upon the financial skills & spectrum of financial services & instruments offered by the merchant banker. Hence, merchant banking service are taking shape for turbulent times.
doc_350357315.pptx