Merchant Banking Firm – Overview, Role And Services
March 05, 2021
What is a merchant bank?
A merchant banking firm is a financial organisation that provides you with an amalgamation of banking and financial consultancy services. Not only does a merchant bank help you arrange your loans, but it also offers you appropriate guidance as to how to plan and invest your finances.
Running a business and maintaining its finances is not everyone's cup of tea. One has to look at a number of aspects in order to make the corporation run steadily. If you are a company owner and are looking for assistance in handling your finances, look no further than availing a merchant bank's service.
Overview of a merchant banking firm.
As per the definition given by the Ministry of Finance, a merchant banker is a person who is involved in the business of issue management, i.e. either by making arrangements for selling, buying or accepting the securities as a manager, consultant or advisor.
In India, merchant Banking firms were first introduced in the year 1967 by the Grindlays bank. Currently, there are more than 200 SEBI registered merchant banks in India.
Services of merchant banking firms.
Obtaining merchant banking services for your business can reap innumerable benefits for your business. Here is a list of services offered by them.
- Project Counselling: Starting from the initial phase, i.e. preparing an application to obtaining sponsors, the project is managed by a team of specialists from a merchant banking firm.
- Issue Management - Another service offered by merchant banks in marketing corporate securities such as corporate shares or bonds by giving them to the public. In addition to this, the pricing is also decided by Merchant bankers.
- Underwriting of the public issue: In this, an underwriter guarantees that in case an under subscription occurs, all the liabilities would be borne by him.
- Managing debt and equity offerings: It is one of the main services offered by a merchant bank. The service includes assisting businesses in obtaining funding from the market.
- Managing portfolio: Under this service, the securities are maintained efficiently. This ensures good returns are obtained from them along with reduced risks.
- Loan syndication: Merchant bankers help their clients to raise syndicated loans from various financial institutions like banks.
- Financial advisory services and corporate counselling: Merchant banking firms assist you in taking care of your corporation's finances. In addition to it, corporate counselling services are given to help businesses thrive.
- Corporate restructuring / reorganisation techniques: When one company takes over the other, a merchant bank acts as a mediator in the companies' negotiation process. A fee is charged for the merchant banks’ service, ensuring that it takes place without any hassle.
Role of a merchant banking firm.
An important role is played by a merchant banking firm in the public issue procedure. While playing a banker's role in an issue, the merchant banker needs to keep transparency about the details with the Securities Exchange Board of India ( SEBI ).
Here are some of the roles played by a merchant banker in public issues.
- Adhering to a code of conduct: A code of conduct needs to be followed by a Merchant banking organisation during their working. This includes keeping the client information confidential while carrying out its processes.
- Providing information - A merchant banker is required to furnish information on the following:
- Total number of issues in which the merchant banker is involved as a banker to issue
- Complete details of applications with the amount of money received should also be included.
- Maintaining a record: Books of accounts need to be maintained for at least three years with records of the organisation's details.
Benefits of services offered by merchant banking firms.
Availing of the services of merchant banks comes with innumerable benefits. Some of them are listed below.
- Hassle-free funds for your business: A merchant bank will help you get funds for growing your business. Additionally, you can use these funds to sail through tough times during financial distress as well.
- Support your project ideas: A project idea is turned into a reality by taking assistance from these experts. Merchant bankers will provide you with honest feedback and help you achieve your goals.
Best merchant banking firm in Gurgaon and Mumbai.
Your search for the best merchant banking firm in Mumbai ends here at Resurgent India Ltd. It is one of India's top investment banks that have skilled professionals from various areas to help you meet your business goals. Visit the Resurgent India website today to know more about their services.