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Merchant Banking in India
Merchant Banking refers to the professional service provided by the merchant bankers that basically comprises of consultancy and banking services. In return for there special types of services, they charge an adequate amount of consideration from their client in the form of there fee.
Role of Merchant Banking in India. basically provide services in the field of marketing, management, legal and financial matters to their clients. Its role ranges from aiding the person in starting the business, provide ways for raising funds, plays an efficient role in expanding the operations and also helps in reconstructing and reviving of sick business units. In other words, it is also termed as the financial engineer of business organizations.
Functions of Merchant Banking
Raising Finance for Clients
Merchant Banking assists its consumers to raise finance by the issue of debentures, shares, bank loans, etc. in the domestic and international market. Fund can be used in a new project or expansion of the business.this is the main function of merchant banking.
Managing the Portfolio of Its Clients
Merchant bank gives services not just only to the companies for issue in the securities but to the investor also. They advise their client, often institutional investor about the investment decision. In which securities to invest merchant Bank provides essential help to the investor by advising on the best choice of investment.
Services to Non-Resident Indian
In order to bring outside capital resource for being invested in India, the government has offered many incentives to non-resident Indian and person of Indian Origin resident abroad. Merchant banks provide special assistance to this account to increase the NRIs to invest their savings in the Indian industry. Merchant Bank advice on the selection of investment to these investors.
Stock Exchange Broker
Merchant bankers sell and buy stock in the stock exchange on behalf of the Customers. They additionally conduct analyses on stock and advise their clients which stock to be purchased, the time of buying stock, the quantity to be purchased. Merchant bankers tell at the time for selling these shares.
Handling Companies Public Issues
Earlier, The Functions of Merchant Banking had been limited to the management of public issue of the corporate securities by the companies. Existing companies and foreign companies ask for equity as required. In this Merchant Bank usually act as a sponsor of the issue they obtain consist of control of capital issue. now, SEBI is contributing plenty of other services to assure success in the marketing of securities
Services to public sector undertaking
Merchant banker offers various services to public sector undertakings and units and their public utilities. They support in raising capital (long-term), in the marketing of securities, in international collaborations as well as in managing for long-term capital from lending institutions.