To understand who is merchant banker and its basic role.

1. INVESTMENT LAW
Presentation
Commercial law Batch (2017-2018)
Topic: Merchant Banker
Shlisha Devadiga
CMR School Of Legal Studies
Under Supervision: Mrs. Sneha Shivakumar

2. What is Merchant Banking??
 Merchant Banking may be defined as an institution which
covers a wide range of activities such as underwriting of
shares, portfolio management, project counseling,
insurance etc.
 They all render these services for a fees. Both commercial
and investment banks may engage in merchant banking
activities.
 The original purpose of merchant banks was to facilitate
and finance production and trade of commodities and
hence its named “Merchant”.

3. What is Merchant Banking?? Cont..
 Merchant Banks are financial institutions.
 Modern British usage they are known as Investment
banks.
 They engage in business loans as well as underwriting.
 They perform combination of 2 services: Consultancy and
Banking services.
 Also known as Intermediaries.
 International Transaction.

4. Merchant Banking In India
 Foreign bank “National Grindlays Bank” started in 1967.
 Then “Citibank” in 1970 & “State Bank of India” in 1972 started
Merchant Banking.
 Later “ICICI Bank” set up its merchant banking followed by
“Bank of India”, “Bank of Baroda”, “Canara Bank” etc.

5. Who is a Merchant Banker?
 A merchant banker is a link between a company
raising fund and investors.
 Merchant is the one who underwrites corporate
securities and advises on issues like corporate
mergers.
 They can be in a form of a bank, company, firm or a
proprietor.
 They understand the requirements of a business
strategies and advise accordingly.

6. Functions/ Roles of Merchant Banks
 Raising finance
 Promotional Activities
 Brokers in Stock Exchange
 Project Management
 Advise on modernization and expansion
 Credit Syndication

7. Functions of Merchant Banks (cont)
 Handling Government’s consent
 Revival of sick units
 Portfolio Management
 Corporate Restructuring
 Leasing and Finance

8. SEBI Regulations for Merchant Banking
 Acc to SEBI Regulation 1992: Its mandatory
for a merchant banker to hold a certificate of
registration granted by the SEBI. A merchant
banker has to register himself under
category I.
 Category I: Advisor, consultant, issue
manager, underwriter and portfolio
manager.
 Capital Adequacy Norms: 5 Crore.

9. SEBI Regulations for Merchant Banking
Code of Conduct:
 Protect interest of investors.
 Conduct business with dignity, integrity and fairness.
 Professionally and ethically fulfil all obligations.
 Discriminating against clients.
 Necessary documents to be issued to all investors.
 Advise clients.
 Keep clients informed.
 Inform SEBI regarding any legal proceedings

10. SEBI Regulations for Merchant Banking
Code of Conduct (Contd)
 Internal code of conduct
 Employees working under them are capacitated to be
merchant bankers
 Responsible for all acts of agents and employees.
 False Market.
 Abide strictly with SEBI Rules.

11. Thankyou