1. “ an institution which covers a wide range of
activities such as management of customer
services, portfolio management, credit
syndication, counceling etc.”
Started by national Grindlays bank in 1967
and city bank in 1970.
4. ISSUE MANAGEMENT : Management of issues
involves marketing of corporate securities
ie…equity shares, preference shares and
debentures by offering them to public.
◦ Pre-issue activities: They prepare copies of
prospectus and send it to SEBI and then file them to
Registrar of Companies
◦ They conduct meetings with company
representatives and advertising agencies to decide
upon the date of opening issue, closing issue
, launching publicity campaign etc..
◦ They help the companies in fixing up the prices for
their issues.
◦ Post-issue activities: It includes collection of
application forms , screening of applications
,deciding allotment procedure , mailing of allotment
letters , share certificates and refund orders.
5. . PORTFOLIO MANAGEMENT : Portfolio refers
to investment in different kinds of securities
such as shares , debenture issued by different
companies It is a combination of assets but a
carefully blended asset combination.
Portfolio management refers to maintaining
proper combination of securities in a manner
that they give maximum return .
Investors are interested in safety , liquidity
and profitability of his investment but they
cant choose the appropriate securities . So
merchant bankers help their investors in
choosing the shares . They conduct regular
market and economic surveys.
8. CAPITAL ADEQUACY NORMS :
Category I : Rs. 5 crores
Category II : Rs.50 lakhs
Category III : Rs.20 lakhs
Category IV : Nil
9. MERCHANT BANKING REGULATIONS :
Certificate from SEBI is a must.
They are of four types:
Category I merchant bankers : Can act as Issue
managers , advisor, consultant, portfolio
manager, underwriter.
Category II merchant bankers : can act only as
co-managers advisor, consultant, portfolio
manager, underwriter.
Category III merchant bankers : underwriter,
advisor or consultant but cannot undertake
portfolio management
Category IV merchant bankers :can merely act as
consultant or advisor to issue of capital
10. GUIDELINES FOR MERCHANT BANKERS : SEBI‟s
authorization is a must to act as merchant
bankers.
Authorization criteria include
◦ Professional qualification in finance , law or business
management
◦ Infrastructure like office space ,equipment and man
power
◦ Capital adequacy
◦ Past track of record ,experience , general reputation and
fairness in all transactions
Every merchant banker should maintain copies
of balance sheet , Profit and loss account ,
statement of financial position
Half-yearly unaudited result should be
submitted to SEBI
Merchant bankers are prohibited from buying
securities based on the unpublished price
sensitive information of their clients
11. SEBI has been vested with the power to suspend
or cancel the authorization in case of violation of
the guidelines
Every merchant banker shall appoint a
„Compliance Officer‟ to monitor compliance of
the Act
SEBI has the right to send inspecting authority to
inspect books of accounts, records etc… of
merchant bankers
Inspections will be conducted by SEBI to ensure
that provisions of the regulations are properly
complied
An initial authorization fee, an annual fee and
renewal fee may be collected by SEBI
A lead manager holding a certificate under
category I shall accept a minimum underwriting
obligation of 5% of size of issue or Rs.25 lakhs
whichever is less.
12. Ability to analyse
technical , financial
or economic factors
Knowledge of
trends,
environment
Ability to build
client bank relation
Innovative approach
High professional
standard
