Merchant banks are the monetary institutions that supply monetary solutions, options, & consultation to organisations. According to a notification of the Ministry of Finance in India, a Merchant Banker in India is defined as 'any individual engaged in the organization of challenge management either by generating arrangements relating to promoting, acquiring, or subscribing to the securities as manager, consultant, an adviser in relation to such an challenge management'. As a result, a merchant banker supplies its client's consultancy for monetary, marketing and advertising, managerial and legal matters.

What is Merchant Banking?

In contrast to industrial banks who caters to the demands of the popular man whereas merchant banks cater to the demands of corporate firms.

Merchant Banking is ordinarily the provision of guidance and service to corporate for a charge, which can assist an entrepreneur start out a new venture, raise capital, expand and modernize the current organization, restructuring a organization or assist businesses register, invest in and sell assets (shares) at a stock exchange.

What are Merchant Banking Solutions?

Project Management: Merchant bankers prepare project reports to analyse the financing patterns to evaluate the price of a project and appraising the very same with monetary institutions.

Management of Debt and Equity presents: 1 of the big functions of a merchant banker in India is assisting businesses in raising funds from the investors. The primary solutions supplied are,

  • Item designing
  • Pricing
  • Registration of documents
  • Guaranteeing assistance
  • Allocation and refund
  • Handle Stock exchange listing

Management of Challenges: These bankers play an vital part in the management of challenge that requires the marketing and advertising of corporate securities like equity shares, preference shares and bonds offerings to the public.

Merchant banks act as a middle man in aiding transfer of capital from investors to their client. Per the SEBI suggestions in India, a merchant banker in India, organizes meetings in between the corporation representatives and agents to settle arrangements connected registration of prospectus, launching marketing campaign and repair board meetings to pass important resolutions. These bankers also seek the advice of businesses in the Pricing of difficulties. The merchant bankers also supply Underwriting of Public Challenge (not exceeding 15%).

Client Portfolio Management: Managing a diverse array of securities such as shares, bonds issued by various businesses to make certain maximum return with minimum threat.

Placement and distribution: These bankers help in the allocation and distribution of securities by way of the merchant banks institutional and retail network.

Corporate Restructuring: These bankers act as the middle agents in negotiations in between the two businesses and assisting the management of its client for numerous to restructure activities such as mergers and acquisitions, divestitures, management buyouts, joint venture and a lot more.

Off Shore Funding: The merchant bankers assist their consumers handle joint ventures, foreign currency investment and foreign collaboration arrangements.

Loan Syndication: Merchant bankers help consumers in acquiring term loans for projects, obtainable from a single improvement finance institution, a syndicate or a consortium.

Corporate Counselling and Advisory Solutions: Corporate counselling is a complete package of all merchant banking solutions, such as project counselling, restructuring, challenge management, loan syndication, and so forth. Merchant bankers also supply their corporate customer's customized options to monetary troubles along with attempts to refinancing options, evaluating less costly sources of funds.

On the other hand, 1 must note that to act as merchant bankers in India or firm, 1 ought to have the needed certificate by SEBI the securities and exchange board of India.