Merchant Banking Pregnant - Functions Of Merchant Banking

Merchant Banking Meaning

Merchant Banking is a combination of Banking as well as consultancy services. It provides consultancy to its clients for financial, marketing, managerial as well as legal matters. Consultancy agency to render advice, guidance as well as service for a fee. It helps a homo of affairs to laid about a business. It helps to heighten (collect) finance. It helps to expand as well as modernize the business. It helps inwards restructuring of a business. It helps to revive sick describe of piece of employment concern units. It equally good helps companies to register, purchase as well as sell shares at the stock exchange.

In short, merchant banking provides a broad arrive at of services for starting until running a business. It acts equally Financial Engineer for a business.

Image credits © Prof. Mudit Katyani.

Merchant banking was commencement started inwards Republic of Republic of India inwards 1967 yesteryear Grindlays Bank. It has made rapid progress since 1970.

Functions of Merchant Banking

The of import functions of merchant banking are depicted below.

The functions of merchant banking are listed equally follows:

1. Raising Finance for Clients : Merchant Banking helps its clients to heighten finance through lawsuit of shares, debentures, banking concern loans, etc. It helps its clients to heighten finance from the domestic as well as international market. This finance is used for starting a novel describe of piece of employment concern or projection or for modernization or expansion of the business.
2. Broker inwards Stock Exchange : Merchant bankers deed equally brokers inwards the stock exchange. They purchase as well as sell shares on behalf of their clients. They deport interrogation on equity shares. They equally good suggest their clients almost which shares to buy, when to buy, how much to purchase as well as when to sell. Large brokers, Mutual Funds, Venture capital companies as well as Investment Banks offering merchant banking services.
3. Project Management : Merchant bankers care their clients inwards the many ways. For e.g. Advising almost place of a project, preparing a projection report, conducting feasibility studies, making a conception for financing the project, finding out sources of finance, advising almost concessions as well as incentives from the government.
4. Advice on Expansion as well as Modernization : Merchant bankers arrive at advice for expansion as well as modernization of the describe of piece of employment concern units. They arrive at adept advice on mergers as well as amalgamations, acquisition as well as takeovers, diversification of business, unusual collaborations as well as joint-ventures, applied scientific discipline up-gradation, etc.
5. Managing Public Issue of Companies : Merchant banking concern advice as well as deal Earth lawsuit of companies. They render next services:
   1. Advise on the timing of Earth issue.
   2. Advise on the size as well as cost of the issue.
   3. Acting equally director to the issue, as well as helping inwards accepting applications as well as resources allotment of securities.
   4. Help inwards appointing underwriters as well as brokers to the issue.
   5. Listing of shares on the stock exchange, etc.
6. Handling Government Consent for Industrial Projects : Influenza A virus subtype H5N1 homo of affairs has to larn regime permission for starting of the project. Similarly, a companionship requires permission for expansion or modernization activities. For this, many formalities conduct maintain to hold upwards completed. Merchant banks exercise all this piece of employment for their clients.
7. Special Assistance to Small Companies as well as Entrepreneurs : Merchant banks suggest small-scale companies almost describe of piece of employment concern opportunities, regime policies, incentives as well as concessions available. It equally good helps them to bring wages of these opportunities, concessions, etc.
8. Services to Public Sector Units : Merchant banks offering many services to world sector units as well as world utilities. They care inwards raising long-term capital, marketing of securities, unusual collaborations as well as arranging long-term finance from term lending institutions.
9. Revival of Sick Industrial Units : Merchant banks care to revive (cure) sick industrial units. It negotiates amongst dissimilar agencies similar banks, term lending institutions, as well as BIFR (Board for Industrial as well as Financial Reconstruction). It equally good plans as well as executes the amount revival package.
10. Portfolio Management : Influenza A virus subtype H5N1 merchant banking concern manages the portfolios (investments) of its clients. This makes investments safe, liquid as well as profitable for the client. It offers adept guidance to its clients for taking investment decisions.
11. Corporate Restructuring : It includes mergers or acquisitions of existing describe of piece of employment concern units, sale of existing unit of measurement or disinvestment. This requires proper negotiations, training of documents as well as completion of legal formalities. Merchant bankers offering all these services to their clients.
12. Money Market Operation : Merchant bankers bargain amongst as well as underwrite short-term money market instruments, such as:
    1. Government Bonds.
    2. Certificate of deposit issued yesteryear banks as well as fiscal institutions.
    3. Commercial newspaper issued yesteryear large corporate firms.
    4. Treasury bills issued yesteryear the Government (Here inwards Republic of Republic of India yesteryear RBI).
13. Leasing Services : Merchant bankers equally good care inwards leasing services. Lease is a contract betwixt the lessor as well as lessee, whereby the lessor allows the exercise of his specific property such equally equipment yesteryear the lessee for a for certain period. The lessor charges a fee called rentals.
14. Management of Interest as well as Dividend : Merchant bankers care their clients inwards the administration of involvement on debentures / loans, as well as dividend on shares. They equally good suggest their customer almost the timing (interim / yearly) as well as charge per unit of measurement of dividend.