Merchant Banking and Its Scope - Brilliant Article shared by Prof Amandeep Singh

 

Merchant banking and its scope in India

 

Merchant banking is a combination of banking and consultancy services. It provides consultancy to its clients for financial, marketing, managerial and legal matters. Consultancy means to provide advice, guidance and service. It helps a business person to start a business. It helps to raise (collect) helps finance .It helps to expand and modernize the business .It help in restructuring of a business . It helps to review sick business units. It also helps companies to register, buy and sell share at the stock exchange.

Definition

Merchant banking can be defined as a skill-oriented professional service provided by merchant banks to their clients, concerning their financial needs, for adequate consideration, in the form of fee.Merchant banks are a specialist in international trade and thus, excel in transacting with large enterprises moIn other words, Merchant Banking is a combination of banking and consultancy services and provides consultancy to its clients for financial managerial and legal matters.

MERCHANT BANKING IN INDIA

In 1967, Reserve Bank of India issued its first merchant Banking license to grindlays which started with management of capital issues, production planning, system design. Indian Banks started banking service as a part of multiple services they offered to the clients from 1972 and since 1972 State Bank of India started Merchant Banking divisions Commercial Banks and Foreign Development Finance Institutions have organized them through formation of division: nationalized banks formed Subsidiaries Companies and share brokers have constituted themselves into public Ltd. company or registered themselves into private limited companies.

 

Merchant Banking is practiced in India as

1. Foreign Bank: Merchant Bank also practiced as a foreign bank as it guides to conduct and market practice in foreign exchange.

2. Private Bank: Merchant Bank is practiced as a private bank by collaborating and sharing ownership in order to indulge private sector.

3. Indian Bank : Merchant Bank is practiced as Indian Bank by collaborating more and leading to more investment in India.

4. Financial Institutions: Merchant Bank is practiced as financial institution in order to involve financial institution in working for more issues and more consultancy services.