INSTITUTIONAL STRUCTURE & FUNCTIONS OF MERCHANT BANKERS Dr.P.Saradhamani , Professor 7/27/2017

INTRODUCTION The term 'merchant banking' has been used differently in different parts of the world. Accepting and Issuing houses (U.K) Investment banking (U.S.A) The word merchant banking has been so widely used that sometimes it is applied to Banks who are not merchants Merchants who are not banks Intermediaries who are neither merchants not banks. Dr.P.Saradhamani , Professor 7/27/2017

In India merchant banking services were started only in 1967 by National Grindlays Bank followed by Citi Bank in 1970. The State Bank of India was the first Indian Commercial Bank having set up separate Merchant Banking Division in 1972. In India merchant banks have been primarily operating as issue houses than full- fledged merchant banks as in other countries. Dr.P.Saradhamani , Professor 7/27/2017

A merchant bank may be defined as an institution or an organization which provides a number of services including issues management, portfolio services, underwriting of capital issues, insurance, credit syndication, financial advices, project counseling etc. Dr.P.Saradhamani , Professor 7/27/2017

1. Issue Management 2. Stock Broker Management of issues refers to effective marketing of corporate securities viz., equity shares, preference shares and debentures or bonds by offering them to public Pre-issue Post- issue 2. Stock Broker Merchant bankers act as brokers in the stock exchange. They buy and sell shares on behalf of their clients. Dr.P.Saradhamani , Professor 7/27/2017

4. Corporate Restructuring 3. Project Management/Appraisal Merchant bankers help their clients in the many ways. For e.g. Advising about location of a project, conducting feasibility studies 4. Corporate Restructuring It includes mergers or acquisitions of existing business units, sale of existing unit or disinvestment Dr.P.Saradhamani , Professor 7/27/2017

6. Credit Syndication 5. Portfolio Management Merchant banks offer services not only to the companies issuing the securities but also to the investors. They advise their clients, mostly institutional investors, regarding investment decisions 6. Credit Syndication Merchant banks provide short-term as well as long- term credit from various bank and financial institutions, etc. They also manage Euro-issues and help in raising funds abroad Dr.P.Saradhamani , Professor 7/27/2017

8. Acceptance credit and Bills discounting 7 . Stock Underwriting When owners of a large company want to raise capital through investors in the stock market, they can acquire the services of a merchant bank to take care of the job 8. Acceptance credit and Bills discounting The advancement of loans to business concerns on the strength of such investments. Dr.P.Saradhamani , Professor 7/27/2017

OTHER FUNCTIONS 9. Special Assistance to Small Companies and Entrepreneurs 10. Services to Public Sector Units 11. Revival of Sick Industrial Units 12. Leasing Services 13. Management of Interest and Dividend Dr.P.Saradhamani , Professor 7/27/2017

Dr.P.Saradhamani , Professor 7/27/2017