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PROJECT STUDY ON:
MERCHANT BANKING
Who is a Merchant Banker?
A merchant banker can be defined as “An organization that acts as an intermediary between the issuers and the ultimate purchasers of securities in the primary security market.”
A merchant banker is an institution that helps companies to raise capital. It is an organization that underwrites corporate securities, provides advisory services to its clients.
What is Merchant Banking?
Merchant bankers facilitate issue process and their activities are termed as merchant banking ‘Essentially, Merchant banking is what merchant bankers do.’
Merchant Banking As per RBI
A merchant banking company has been exempted from the provisions of Section 45-IA [Requirement of registration and net owned fund], Section 45-IB [Maintenance of liquid assets] and 45-IC [Creation of Reserve Fund] of the RBI Act, 1934 , [3] Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998 and [4] Non-Banking Financial Companies Prudential Norms (Reserve Bank) Directions, 1998 subject to compliance with the following conditions:
(a) It is registered with the Securities and Exchange Board of India as a Merchant Banker under Section 12 of the Securities and Exchange Board of India Act, 1992 and is carrying on the business of merchant Banker in accordance with the Securities and Exchange Board of India Merchant Banking (Rules) 1992 and Securities and Exchange Board of India Merchant Banking (Regulations) 1992;
(b) acquires securities only as a part of its merchant banking business;
(c) ...