FUNCTIONS OF MERCHANT BANKING

1. MERCHANT BANKING
-By
RAVI SHEKAR S
MBA
REVA UNIVERSITY

3.  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.

4.  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.

5. 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.

6. 2. Stock Broker
Merchant bankers act as
brokers in the stock
exchange. They buy and sell
shares on behalf of their
clients.
1. Issue Management
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

7. 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

8. 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

9. 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.

10. 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