Merchant banks are the financial institutions offering financial solutions, options, & consultation to businesses. According to a notification of the Ministry of Finance in India, a Merchant Banker in India is described as ‘any individual engaged in the company of issue management either by making arrangements about selling, purchasing, or subscribing to the securities as director, advisor, an advisor in relation to this issue direction’. Therefore, a merchant banker supplies its customer’s consultancy for financial, marketing, legal and managerial issues.
What’s Merchant Banking?
Unlike commercial banks that caters to the requirements of the usual man whereas retailer banks cater to the requirements of corporate companies.
Merchant Banking is generally the provision of advice and support to corporate for a commission, which may help an entrepreneur begin a new enterprise, increase capital, expand and update the present company, restructuring a company or help businesses enroll, purchase and sell assets (stocks) in a stock market.
Project Management: Merchant bankers prepare job reports to analyse the funding patterns to value the expense of a job and assessing the same together with financial institutions.
Management of Debt and Equity provides: One of the more important features of a merchant banker in India is helping companies in raising capital from the investors. The main services provided are,
• Merchandise designing
Management of Issues: These bankers play an significant part in the managing of issue which requires the promotion of corporate securities such as equity shares, preference shares and bonds supplies to the general public.
Merchant banks function as a middle man in helping transfer of funds from shareholders to their customer. These bankers also consult businesses from the prices of issues. The merchant bankers also supply Underwriting of Public Issue (not exceeding 15 percent).
Client Portfolio Management: Handling a diverse variety of securities such as stocks, bonds issued by various organizations to ensure maximum yield with minimum risk.
Placement and supply: These bankers help out with the allocation and distribution of securities throughout the merchant banks retail and institutional community.
Loan Syndication: Merchant bankers help clients in receiving term loans for jobs, obtainable from one development finance institution, a syndicate or a consortium.
Corporate Counselling and Advisory Services: Corporate counseling is an extensive package of all merchant banking solutions, such as job counselling, restructuring, problem management, loan syndication, etc.. Merchant bankers also provide their company client’s customized solutions to financial issues together with efforts to refinancing options, assessing cheaper sources of capital.
However, an Individual should note that to behave as merchant bankers in India or business, one must possess the required certification by SEBI the securities and exchange board of India