Merchant Banking

Merchant bankers act as intermediaries between the issuers of capital and the investors who purchase these securities

Merchant banking is the financial intermediation that matches the entities that need capital and those that have capital for investment.

Scope/Role of

Merchant banking

Regulation of Merchant Banking Activity

• The merchant banking activity in India is governed by SEBI (Merchant Bankers) Regulations, 1992.• Registration with SEBI is mandatory to carry out

the business of merchant banking in India.An applicant should comply with the following norms: •The applicant should be a corporate body.•The applicant should not carry on any business other than those connected with the securities market.•The applicant should have necessary infrastructure like office space, equipment, manpower, etc.•The applicant should have a minimum net worth Rs50 million.

1. The Merchant Banking was at its best during 1985-1992 being when there were many new issues. It is expected that 2010 that it is going to be party time for merchant banks, as many new issue are coming up.

2. The Foreign Investors both in form of portfolio investment and through direct investments are venturing in Indian economy. It is increasing the scope of merchant bankers in many ways.

3. Disinvestment in government sector in the country gives a big scope to the merchant banks to function as consultants.

4. New financial instruments are introduced in the market time and again. This basically provides more and more opportunities to the merchant banks.

Recent Developments in Merchant Banking

Primary Market in India and abroad

The process of selling new  stock issue, this sale is an initial public offering (IPO).

Once issued the securities typically trade on a secondary market such as a stock exchange, bond market or derivatives exchange.