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.
Grindlays Bank was the first bank to offer merchant banking services in India in 1967. After that, it has made rapid progress.
Role and Functions of Merchant Banking in India
Assisting clients in fundraising
Arranging funds and providing various sources of raising fund is one of the important function played by the merchant bankers. It helps in raising finance through taking bank loans, issue of securities like shares, debentures, etc. It takes into account both national and international market for fundraising and helps the businesses in their expansion and modernization plan.
Acting as the stock exchange broker
Providing services as the stock exchange broker is also one of the functions played by the merchant banker. Buying and selling securities for their customers comes under their duties. They perform complete detailed research on the different securities in the market and guides their clients in which to invest for better growth and profitability.
Helps in the management of the project
Merchant bankers through their specialized services help their client in full management of their project. They perform functions like finding the best location and suggesting it to their clients, doing and arranging for detailed study for the project, thinking and coming up with best financing plans for project financing and keeping in touch with the latest beneficial schemes of the government to its clients.
Helps in up-gradation and expansion of the business
Taking a decision regarding the expansion of business operations at the right time is beneficial for a profitable venture. On the other hand, it, if not taken at a proper time, may lead to losses. Therefore merchant bankers conduct a complete survey of the market and provide expert advice like the expansion of business, takeovers, and acquisitions, upgradation, involving in joint ventures, etc.
Handling Companies public issues
Companies make public issues of their securities with the sole motive of raising and acquiring efficient funds. They make a detailed analysis of the market where securities are to be issued and then guide the companies that when they should make a public issue, how they should set the prices for their securities, play a very efficient role in full issue process like helps in accepting of public application and then in allotment of securities to the public, appoints underwriters and broker for this process and also completes all formalities for securities listing on stock exchanges.
Fulfilling all government rules and regulation for the successful progress of the business
Every business needs to follow some strict guidelines set by the government for their operations. They need to be fulfilled by the respective businesses from time to time. Merchant bankers perform the function of fulfilling all the government formalities and get their consent and save their client from getting involved in all these hectic processes.
Helps the small and sick companies for their revival
There are many organisation who are not able to work or progress efficiently because they are lacking somewhere of opportunities or don’t have full relevant information. Merchant banker helps these organizations to grow by updating them with new opportunities, arranging a proper finance option and also assisting them in their management and legal matters.
Helps in managing the portfolio of its clients
Unless and until the portfolio of investors is properly managed and composed of better securities, investor can’t expect a better return. Merchant banker plays a very efficient role in managing portfolio its clients with the sole objective of making their investments liquid, safe and profitable. It acts as an expert regarding investment decisions to its clients.