Financial Services

SYDENHAM COLLEGE OF COMMERCE AND ECONOMICS CHURCHGATE, MUMBAI - 400 020

FINANCIAL SERVICES Project Report On

COMPARATIVE ANALYSIS OF MERCHANT BANKING SERVICES IN PUBLIC SECTOR BANK AND PRIVATE SECTOR BANK

Master of commerce Banking and finance Semester I 2014-2015

Submitted by RIDDHIMA PRAMOD SAWANT ROLL NO: 102

DECLARATION

I miss.Riddhima Pramod Sawant Student Of Sydenham college Of Commerce And

Economics Of M.Com Part I (Morning) Banking And Finance Semester I Have

Completed This Project On Comparative Analysis Of Merchant Banking Services In

Private Sector Bank And Public Sector Bank In The Academic Year 2014-15.

The Information Submitted Is True And Original To The Best Of My Knowledge.

Signature of student

Riddhima pramod sawant Roll no: 102

BONA FIDE CERTIFICATE

This is to certify that miss. Riddhima Pramod Sawant Student Of Sydenham college Of Commerce And Economics Of M.Com Part I Banking And Finance Semester I Have Completed This Project On „‟Comparative Analysis Of Merchant Banking Services In Private Sector Bank And Public Sector Bank‟‟ In The Academic Year 2014-15 under the guidance of prof.smita kuntay. The Information Submitted Is True And Original To The Best Of My Knowledge .

Signature of internal examiner

_____________

Signature of Project guide

_________________

Signature of coordinator

Signature of external examiner

_____________________

________________________

Date:

Place:

ACKNOWLEDGEMENT

I would firstly like to thank the “university of Mumbai ‟‟for giving the liberty of choosing

Such topic which will be benefited to us in future. I would like to thanks the principal of

Sydenham college dr.annasaheb khemnar for giving me the opportunity to study in this

Esteemed college and doing the course of banking and finance. I would like to express my

Sincere gratitude‟s and thanks to prof.smita kuntay who is my project guide , as she have been

The guiding light for this project and has also provided me with best of my knowledge ,advice

And encouragement which helped me in successful completion of my project .

Signature of student

INDEX

Sr. no

Particulars

1

Cover page

2

Declaration

3

Bona fide certificate

4

acknowledgement

5

Introduction

6

Objective of study

7

History of merchant banking

8

Definition

9

Evolution and emergence of merchant banking

10

Merchant banking in India

11

Need and importance of merchant banking in India

12

Role of merchant banker

13

Role in the market

14

Banking structure in India

15

Commercial banking

16

Commercial bank vs merchant bank

17

International scenario of merchant bank

18

Merchant bank in USA

19

Problem of merchant banking

20

Good qualities of merchant banker

21

Merchant banking organisation

22

Merchant banking registered with SEBI

23

Indias top 10 player

24

Data analysis and interpretation

25

Findings

26

Conclusion

27

Bibliography

28

annexure

INTRODUCTION

“A merchant bank can be generally described as a financial services company with a private equity investment arm offering investment banking and ancillary services as well .” a merchant bank acts not only as an advisor and a broker but also as a principal, a merchant bank has a longer term approach than a typical investment bank and is highly concerned with the viability of each investment opportunity and providing the right advice for a strong partnership with each client company . In banking a merchant bank is a traditional term for an investment bank. It can also be used to describe the private equity activities of banking this project is about the comparative study of merchant banking in private sector bank and public sector bank . tremendous changes sweeping the financial world, merchant banking has emerged as an indispensable financial advisory package. Merchant banking is a service –oriented function that transfers capital from those who own to those who can use it. they try to identify the needs of the investors and corporate sector and advise entrepreneurs what to do to be successful.

OBJECTIVE OF STUDY

It will help us to develop the ability to study the functioning of merchant banking in India and learn and apply multidisciplinary concepts ,tools and techniques to solve vital problems.

It familiarizes with the various services provided by the merchant bankers.

They would help us to draw comparison between public and –private sector companies engaged in merchant banking activities.

Based upon the comparison it would help us to determine which sector has more growth potential and where should one invest his/her funds to maximise the return at minimum risk.

HISTORY OF MERCHANT BANKING

During the seventeenth and most of the eighteenth century international finance was centered on Amsterdam. Consequently Amsterdam merchants became the first masters of the various financial techniques and developments which, in the course of time, became identified with the emergent profession of ‘Merchant Bankers’.

Commercial Banking and Investment Banking are often confused with Merchant Banking. In many ways, there may be similarities in their functions. However, in certain ways, Merchant Banking is distinctly different from commercial Banking and Investment Banking.

The primary function of a commercial bank is to receive deposits from the public and lend the same to others. Commercial Banks can undertake some of the merchant banking activities like Issue Management whereas Merchant Banking Units can not undertake commercial banking activities. However, the functions of Merchant Banking may not widely vary from Investment Banking. The Merchant Banker mainly deals with Issue Management, post issue services, corporate adviser services etc. the Investment Banker undertaken trading in securities, Investment advises and Bought out deals which are not the main activities of Merchant Bankers.

In today’s Scenario the Merchant banker and management consultants undertake advisory services to the corporate sector. The Merchant Banker advices corporation and firms relating to opening of issues, receiving loans etc, which the management consultants also do. The management consultant have a wide area operations like production, Marketing, Personnel Relations, of finance etc. but they lack statutory recognition to undertake capital market related activities which has enabled the merchant banker to cater to the needs of the Corporate Sector.

A merchant bank may be considered as an institution which centres its operation on all or most of the following activities. (1) Corporate financial advice, on such diverse matters as new share and bond issues, capital reconstructions, mergers and acquisitions; (2) The taking of deposits and currency, money market operations including foreign exchange dealing; (3) Medium-term lending and syndication of loans; (4) Acceptance credits and all forms of export finance; (5) The holding and dealing in quoted and unquoted investment; and (6) Fund management on behalf of clients, most typically pension funds, unit trust, investment trusts and wealthy individuals.

DEFINITION

The first authoritative definition for the term ‘Merchant Banker’ has been given in the Rule 2 (e) of SEBI (Merchant Bankers) Rules, 1922. Accordingly, “A Merchant Banker means any person who is engaged in the business of Issue Management either by making arrangements regarding selling, buying or subscribing to Securities as Manager, Consultant, Adviser of

rendering Corporate

Advisory Service in relation to such Issue Management”.

Sec/5 (b) of the Banking Regulation Act, 1949 defines Banking as “accepting, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise”.

The Notification of the Ministry of Finance defines a merchant banker as, “any person who is engaged in the business of issue management either by making arrangements regarding selling, buying or subscribing to the securities as manager, consult, adviser or rendering corporate advisory service in relation to such issue management”.

Merchant bankers and market making Many successful public issues get listed on the stock exchanges but later do not see any trade i.e liquidity in the market. Listing remains a formality only and investors practically cannot buy/sell shares of that company for lack of liquidity (volume). In well organized markets, there is a system of market makers who offer two way quotes on any scrip, so that continuous liquidity is provided to all scrips. Market making means that a trader or a company puts both buy and sell orders into the market, and wait for people to trade with him on either sides. Market making could be made compulsory at least for a period of six to twelve months after listing of issues. Most merchant bankers and brokers are significantly undercapitalized to perform

EVOLUTION & EMERGENCE OF MERCHANT BANKING

India has entered the 21st century as one of the Asia’s most dynamic economies. This is the part of the assessment made by International Financial and Capital Market Institutions based on India’s economic and financial reforms initiated in 1991 and brought to fruition in various budget.

The progress of any economy mainly depends on the efficient financial system of the country. Indian economy is no exception financial system of the country. The importance of the financial sector reforms affirms an effective means for solving the problems of economic, financial and social in India and elsewhere in the developing nations of the world. The progress of the Securities Industry of any country depends mainly on the flow of funds. In fact, capital generation is the lifeblood of the capital market without which the health and soundness of the financial system cannot be geared and for which well-developed capital market as well as money market is essential.

India’s capital market is among the largest in the developing world. The market is comprised of 24 stock exchanges transacting long-term debt; debentures and equity shares both electronic and physical forms. Derivatives financial instruments are also be added to the market shortly. The number of firms listed on the Indian Stock Exchange is more than the USA.

Market Capitalization of listed firms is 1980s was similar to Brazil, Malaysia,

Singapore and Denmark.

The capital market of the country, however, underwent dramatic changes since the beginning of 1980s basically because of a progressive realization that the command economy on which the emphasis was placed could not lead to higher levels of economic development and that a slant towards a market-oriented economy is necessary. It is in the context of fast expanding economy and a liberalized and deregulated atmosphere that the growth of the Indian Stock Market activities has to be viewed. No wonder that the markets have registered a quantum jump judge by any standards.

MERCHANT BANKING IN INDIA

In India prior to the enactment of Indian Companies Act, 1956,managing agents acted as issue houses for securities, evaluated project reports, planned capital structure and to some extent provided venture capital for new firms. Few share broking firms also functioned as merchant bankers.

The need for specialized merchant banking services was felt in India with the rapid growth in the number and size of the issues made in the primary market. The merchant banking services were started by foreign banks, namely the National Grindlays Bank in 1967 and the City Bank in 1970. The Banking Commission in its report in 1972 recommended the setting up of merchant banking institutions. This marked the beginning of specialized merchant banking in India.

To begin with, merchant banking services were offered along with other traditional banking services. In the mid-Eighties, the Banking Regulation Act was amended permitting commercial banks to offer a wide range of financial services through the subsidy rule. The State Bank of India was the first India Bank to set up merchant Banking division in 1972. Later ICICI set up its Merchant Banking division followed by Bank of India, Bank of Baroda, Canada Bank, Punjab National Bank and UCO Bank. The merchant banking gained prominence during 1983-84 due to new issue boom.

NEED & IMPORTANCE OF MERCHANT BANKING IN INDIA



Important reason for the growth of merchant banking is due to exerting excess demand on the sources of funds forever expanding industry and trade.



Corporate sector had the only alternative to avail of the capital market services for meeting their long-term financial requirements through capital issues of equity and debentures.



With the growing demand for funds there was pressure on capital market that enthused the commercial banks, share brokers and financial consultancy firms to enter into the field of merchant banking and share the growing capital market.



In India have opened their merchant banking windows and are competing in this field, and also doing advisory functions as merchant bankers as well as managing public issues in syndication with other merchant bankers.



Merchant banks can play highly significant role in mobilizing funds of savers to investible channels assuring promising return on investments activity.



With the growth of merchant banking profession corporate enterprises in both public and private, sectors would be able to meet the growing requirements for the funds for establishing new enterprises, undertaking expansion/modernization/diversification of the existing enterprises.



Merchant banks have been procuring impressive support from capital market for the corporate sector for financing their projects.



In view of multitude of enactments, rules and regulations, guidelines and offshoot press release instructions brought out by the Government from time to time imposing statutory obligations upon the corporate sector to comply with all those requirements prescribed therein, the need of skilled agency existed which could provide counseling.



Merchant bankers advise the investors of the incentives available in the form of tax relief’s, other statutory relaxations, good return on investment and capital appreciation in such investment to motivate them to invest their savings in securities.

ROLE OF MERCHANT BANKERS

The role of merchant banker is dynamic in the wake of diverse nature of merchant banking services. Merchant banker’s dynamism lies in promptly attending to the corporate problems and suggests ways and means to solve it. The nature of merchant banking services is development oriented and promotional to help the industry and trade to grow and survive. Merchant banker is, therefore, dedicated to achieve this objective through his dynamism. He is always awake to renew his skills, develop expertise in new areas so as to equip himself with the knowledge and techniques to deal with emerging new problems of corporate business world. He has to keep pace with the changing environment where Government rules, regulations and policies affecting business conditions frequently change; where science and technology create new innovations in production processes of industries envisaging immediate renovations, diversification, modernizations or replacements of existing plant and machinery or other equipments putting new demands for finances and necessitating overhauling of the capital structure of the firms.

Merchant banker has to think and devise new instruments of financing industrial projects. He has to assume wider responsibilities of saving industrial units from going sick and guiding industries to be set up industrially backward areas to eliminate regional imbalances in industrial development of the country. He has to guide the wider section of the community possessing surplus money to invest in corporate securities and other productive investment channels. He has to help the industry in different forms to ensure that it runs risk free and devoid of uncertainty by assisting the has to watch the interest and win over the confidence of the Government, its agencies, along with the entrepreneurs, the investors and the whole community. He must bridge the communication gap between different sections and resolve the problem being faced in different areas concerned with the business world.

To discharge the above role, a merchant banker has t be dynamic. For this reason, a merchant banker is sometimes, called M.B i.e. Moving Bottom, i.e., one who never sits at one place, always moving- attending meetings and meeting clients and constituents, doing business and

getting business by attending meetings and conferences, imparting knowledge to others and acquiring new knowledge to maintain his supremacy in possession of latest information. His role depicts a personality cult, which is unique and envious to be followed by others.

In the days ahead, merchant bankers have very significant role to play tuning their activities to the requirements of the growth pattern of corporate sector, the industry and the economy as a whole, which is, in it, a challenging task and to meet these challenges merchant bankers will have to be more vigorous and strategic in playing their role. They will have also to adopt new ways and means in discharging their role.

ROLE IN THE MARKET

The Securities and Exchange Board of India (SEBI) has stated that merchant bankers must be involved more closely in the market making process as share brokers do not have the requisite expertise to evaluate the fundamentals of the scrips before taking over the role of market makers.

Further, share brokers generally being partnership; firms do not have the financial clout which is necessary for market making activity. Resultantly, the SEBI has suggested that any member of the stock exchange along with one merchant banker registered with SEBI could act as a market maker.

The SEBI has felt that to ensure liquidity of scrip it was necessary to facilitate greater movement, which could only be achieved through the institution of market makers. Market makers would also create a market for the scrip’s by offering two way quotes to the investors. A minimum of ten scrip’s has been proposed by SEBI for the market makers.

MERCHANT BANKERS COMMISSION

As determined by the Finance Ministry, Government of India, Merchant Bankers are eligible to charge commission / fee from their clients as detailed below : (i)

A Merchant Banker can charge 0.5% as the maximum as commission for whole of the issue.

(ii) They can charge project appraisal fees. (iii) A lead manager can claim a commission of 0.5% up to Rs.25 crore and 0.2% in excess of Rs.25 crore. (iv) Underwriting Commission. On amount Type of Security

Devolving underwriters

1.Equity shares

On on

subscribed

amount by

public

2.50

2.50

2.50

1.50

2.00

1.00

2.Preference share/debentures (a) Upto Rs. 5 lakh (b) Excess of Rs. 5 lakh

(v)

Brokerage commission 1.5%

(vi) Other expenses like advertising, printing, Registrar’s expenses, stamp duty etc., in connection with the issue can be reimbursed from its clients.

GROWTH OF MERCHANT BANKING IN INDIA

Formal merchant banking activity in India was originated in 1969 with Merchant Banking Division set up by the Grindlays Bank, the largest foreign bank in the country. The main service offered at that time to the corporate enterprises by the merchant banks included the management of public issues and some aspects of financial consultancy. Other foreign banks like City Bank, Chartered Bank also assumed the merchant banking activity in India. State Bank of India started merchant banking in 1973 followed by ICICI in 1974. Both these Indian merchant bankers emerged as leaders in merchant banking having done significant business during the period of 1974-1987 in comparison to foreign banks. The early and mid-seventies witnessed a boom in the growth of merchant banking organizations in the country with various commercial banks, financial institutions, and broker’s firms entering in to the field of merchant banking.

The early growth of merchant banking in the country is assigned to the Foreign Exchange Regulation Act, 1973 (FERA) where under large number of foreign companies operating in India were required to dilute their foreign holdings in order to continue business in the country. This had caused two-pronged effect viz. firstly, in the form of spate in ‘Foreign Exchange Regulation Act Issues’ eliciting interest of the investors by creating massive awareness about capital markets amongst the new class of investing public, secondly, merchant banking activity became attractive to banks and the firms of consultants and share brokers who entered into this fields vigorously to reap the advantages of the expanding capital markets.

COMMERCIAL BANKING Definition : ‘’An

Institution Which Accepts Deposits, Makes Business Loans, And Offers Related Services. Commercial Banks Also Allow For A Variety Of Deposit Accounts, Such As Checking, Savings, And Time Deposit. These Institutions Are Run To Make A Profit And Owned By A Group Of Individuals, Yet Some May Be Members Of The Federal Reserve System. While Commercial Banks Offer Services To Individuals, They Are Primarily Concerned With Receiving Deposits And Lending To Businesses.’’

Features of commercial bank : A financial institution that provides services, such as accepting deposits, giving business loans and auto loans, mortgage lending, and basic investment products like savings accounts and certificates of deposit. The traditional commercial bank is a brick and mortar institution with tellers, safe deposit boxes, vaults and ATMs. However, some commercial banks do not have any physical branches and require consumers to complete all transactions by phone or Internet. In exchange, they generally pay higher interest rates on investments and deposits, and charge lower fees.

Function of commercial bank :

A bank is nothing which does 2 basic functions 1] borrowing 2]lending Functions of commercial banks are as follows 1]To accept deposit 2]To lend money 3]ECS 4]E-banking 5]Safe deposit vault 6]ATM 7]Credit/debit cards 8]Remittance facility

COMMERCIAL BANKS AND MERCHANT BANKS COMMERCIAL BANK

MERCHANT BANKING

Basically deal in debt related finance and Basically they deal with mainly funds raised their activities are appropriately arrayed through money market and capital market around credit proposals, credit appraisal and and the area of activity is ‘equity and equity loan sanctions.

related finance’.

Are asset oriented and their lending

Are

management

oriented.

They

decisions are based on detailed credit

generally are willing to accept risks of

analysis of loan proposals and the value

business.

of security offered against loans. They generally avoid risks.

They are merely financiers.

There activities include project counseling, corporate counseling in areas of capital restructuring, amalgamations, mergers, takeovers etc., discounting and rediscounting of short term paper in money markets, managing, underwriting and supporting public issues and new issue market and acting as brokers and advisers on portfolio management in stock exchange. This activities have impact on growth, stability and liquidity of money MARKETS

INTERNATIONAL SCENARIO OF MERCHANT BANKING

The merchant banking scenario in developed countries like USA and UK are different from Indian merchant banking activities .the merchant banker is also called as investment bankers .a brief outline of merchant banking in USA and UK has shown in the following .

Merchant bank in united kingdom

In united kingdom ,merchant banks came on the scene in the eighteenth century and early 19th century . Industrial revolution made England into a powerful trading nation. Rich merchant houses that made their fortunes in a colonial trade diversified into banking. There principle activity started with the acceptance of commercial bills pertaining to domestic as well as international trade. The acceptance of trade bills and there discounting gave rise to acceptance houses, discount houses , and issue houses. Merchant bankers initially included acceptance houses, discount houses, and issue houses. A merchant banker was primarily a merchant rather than his customer entrusted banker but him with funds .

merchant banks in UK  Finance forign trade  Issue capital  Manage individual funds

Merchant banking in USA:

Merchant banks make the primary market in USA, arrange mergers and acquisitions, undertake global , custody , proprietary trading and market making , fund management and advisory services to government and firms .

the increased regulation and control of domestic operation s gave a fillip to large us banks to undertake merchant banking functions in international capital markets .

the US investment banks have extended thier operations to the international level.They are largely responsible for the development of the euro-dollar market in the securities and globalisation of capital markets.

They have a prominent presence in London and other European financial centers.Merchant banks have today a strong parent , a strong balance sheet and a strong international network to play a global role.

PROBLEMS OF MERCHANT BANKER

 SEBI guidelines have authorised merchant bankers to undertake issue related activities only with an exception of portfolio management . these uidelines have made the merchant bankers either to restrict their activities or think of separating thse activities from the present one and float new subsidiary and enlarge the scope of its activities.

 SEBI guidelines stipulates a minimum net worth of rs 1 crore for authorization of merchant bankers . small but professional and specialised merchant bankers who do not have a net worth of rs 1 crore may have to close down thiere business . the entry is denied to young , specialised professionals into merchants banking business .



Non co – operation of the issuing companies in timely allotment of securities and refund of application money is another problem of merchant bankers . the guidelines have put the responsibility on the merchant bankers. They have to seek the cooperation of the issuing company to shoulder the responsibility.

QUALITIES OF GOOD MERCHANT BANKER

Merchant bankers are individual experts who organise and manage the merchant banks. The operation of merchant banks are therefore influenced by the personality trait of these individuals . for the success of merchant bank’s operations , the qualities which merchant bankers should have discussed below:

LEADERSHIP : merchant banker should possess all relevant skilss , update knowledge to interact with the client and effectively communicate. Leadership is similar with followers who follow the one who leads.

AGGRESSIVE ACTION : it is a personality trait of a good leader but in merchant banking it has a wider connotation. Aggressive merchnant bankers are always looking for new business.

COOPERATION AND FRIENDLINESS : these two features are the symbol of good leadership but it hardly needs to be stressed that cooperation and friendliness coupled with ursuasiveness are the main instrument with which a merchant bankers mixes with the people .

CONTACTS : success of merchant banker depends upon his sociable nature and the richness of wider contacts. A merchant banker is supposed to be acquired deeply with all the constituents of merchant banking .

ATTITUDE TOWATRDS PROBLEM SOLVING : Client coming to him has got to return fully satisfied having consulted a merchant banker. Positive approach to understand the view points of others , difficulties and thiere adverse circumstances is possible only when a peson is skilled in human relations particularly the inter-personal and intra – personal behaviour .

MERCHANT BANKING ORGANISATIONS

In India, merchant banks operate in the form of Divisions of Indian and Foreign banks and financial institutions, subsidiary companies established by banks like SBI Capital Markets Ltd., can Bank Financial Services Ltd., PNB Capital Services Ltd., Indian Bank Merchant Banking services Ltd., etc., the firm organized by the stock brokers, stock exchange dealers, the financial and technical consultants and chartered accountants. Securities and Exchange Board of India (SEBI) has divided merchant bankers into four categories, which are as follows: -

CATEGORIES

ACTIVITIES

NETWORTH

Category I

To carry on the activity of issue management and Rs.1crore to act as adviser, consultant, manager, underwriter, portfolio manager.

Category II

To

act

as

adviser,

consultant,

co-manager, Rs.50 lakhs

underwriter, portfolio manager. Category III

To act as underwriter, adviser or consultant to an Rs. 20 lakhs issue.

Category IV

To act only as adviser or consultant to an issue

Nil

Merchant Bankers are classified into 4 categories as shown in the above table having regard to their nature and range of activities and their responsibilities to SEBI, investors and issuers of securities. The minimum net worth and initial authorization fee depends on the category. The first category consists of merchant bankers who carry on any activity of issue management, determining financial structure, tie-up of financiers, advisor or consultant to an issue, portfolio manager and underwriter. The second category consists of those authorized to act in the capacity of co-manager/advisor, consultant, and underwriter to an issue or portfolio manager. The third category consists of those authorized to act as underwriter, advisor or consultant to an issue. The fourth category consists of merchant bankers who act as advisor or consultant to an issue.

Merchant banker registered with SEBI:

MERCHANT BANK REGISTERED WITH SEBI

PUBLIC SECTOR

COMMERCIAL BANK 14

FINANCIAL INSTITUTION

PRIVATE SECTOR

International bankers (10), 6

Banks (10), finance & investment (231)

INDIA’S TOP 10 M&A PLAYERS

PLAYERS

Rank „05

Rank ‟04

Mkt

Mkt

Value

share‟

share‟

($m)

05

04

Deals

Kotak/Goldman Sachs

1

4

17.3

13.1

2,534

13

Morgan Stanley

2

2

15.2

14.7

2 ,227

11

Merrill Lynch & Co.

3

3

12.1

14

1,771

12

Standard Chartered

4

9

6.7

4.8

981

5

Ernst & Young

5

1

6.7

16.9

980

37

Citigroup

6

6

6.6

11

962

8

Ambit Corporate Fin

7

8

6.4

4.9

936

21

DBS Group

8

-

4.8

-

704

1

ICICI Securities

9

5

4.4

12.2

649

10

UBS

10-

-

3.8

-

550

3

Data Analysis & Interpretation Q 1 Do you take any financial services from bank? Sr. No.

Take Financial Service

Nos.

Percentage

1

Yes

36

45

2

No

44

55

Total

80

GRAPH

Interpretation Out of total respondents, 45% respondents have taken Financial Service and rest 55% respondents have not taken the Financial Service.

Q 2 Do you Know about Merchant Banking? Sr. No.

Know about Merchant

Nos.

Percentage

1

Yes

32

40

2

No

48

60

Total

80

Interpretation Out of total respondents, 40% respondents Know about merchant banking and rest 60% respondents don’t know about merchant banking.

Q 3 Are you satisfied with the services provided by your bank? Sr. No.

Satisfied

Nos.

Percentage

1

Yes

35

43.75

2

No

45

56.25

Total

80

100

Interpretation Out of total respondents, 43.75% respondents Satisfied and rest 60% respondents don’t Satisfied.

Q4

Are you satisfied with services offered by banks?

Sr. no

Bank

Percentage

1

ICICI

20

2

SBI

35

3

PNB

20

4

BOI

15

5

Other

10

Interpretation



Large no. of companies takes financial services from SBI.

Q5

What is the position of Merchant Banking in Private Sector?

sr.no

Position

Percentage

1

Good

50

2

Normal

35

3

Bad

15

Total

100

Interpretation Out of total respondents, 50% respondents Say Good, 35% Say Normal and rest 15% respondents say bad.

Q6

What is the position of Merchant Banking in Public Sector?

sr.no

Position

Percentage

1

Good

40

2

Normal

55

3

Bad

5

Total

100

Interpretation Out of total respondents, 40% respondents Say Good, 55% Say Normal and rest 5% respondents say bad.

Q7

What type of security have you deposited/you will deposit with the banks ?

Sr.No.

Type of Security

Nos.

Percentage

1.

Bank Security (F.D.)

18

22.5

2.

Gold

0

0

3.

Land Papers

50

62.5

4.

Third person security

12

15

Total:

80

100

Interpretation: Out of total respondence Bank security are 22.5% , Gold are 0%, Land papers are 62.5%, Third Person security are 15%.

Q8

Are you satisfied by Security margin of bank?

Sr.No.

Satisfaction by Security Margin

Nos.

Percentage

1.

Yes

64

80

2.

No

16

20

Total:

80

100

Interpretation Out of total respondents, 80% respondents Satisfied and rest 20% respondents don’t Satisfied.

Q9

Are you satisfied with timely services provide by banks?

Sr. No.

Depends on M.B

Nos.

Percentage

1

Yes

56

70

2

No

24

30

Total

80

100

Interpretation Out of total respondents, 75% respondents Say that They are timely heared and rest 25% say that They are not timely served by merchant banking.

Q10 Will it differ from investment banks?

Sr. No.

Difference

Nos.

Percentage

1

Yes

60

75

2

No

20

25

Total

80

100

Interpretation Out of total respondents,75% respondents Think that It is differ and rest 25% respondents don’t Think so.

Findings  Companies making large size issues of equity shares relied more on foreign merchant bankers than on Indian merchant bankers because of their vast international network.  Year wise participation of merchant bankers in the management of public issues of equity showed that the majority of small merchant bankers were involved in one or two issues only during the year.

 SBI Capital Markets Ltd. was the preferred choice of maximum issuers (43 in numbers). This was followed by Enam Securities Ltd with 35 equity issues. 224 Karvy Investor Services Ltd. managed 34 equity issues. ICICI Securities Ltd, UTI Securities Ltd and Kotak Mahindra Capital Co. Ltd managed 32, 33 and 30 public issues respectively.  SBI Capital Markets Ltd was the preferred choice of public and private banks for the management of their public issues of equity. Out of 40 public issues of equity floated by public sector banks in India during the period under review, SBI Capital Markets Ltd was the lead manager/BRLM/co-lead manager in as many as 31 equity issues.  In most of the cases, the issuer 225 companies appointed their own subsidiary company/sister concern to advise on their equity issue.

 With the exception of SBI Capital Markets Ltd and Canara Bank, no other public sector bank performed a significant role in the public issue management activities.. Other public sector banks’ subsidiaries/merchant banking divisions who showed their presence in public issue management were BOB Capital Markets Ltd, All bank Finance Ltd, BOI Finance Ltd, PNB Capital Markets Ltd. etc.

Conclusion

 Longstanding client relationships

 Strong positions in high-growth client and product niches.

 Multiple revenue growth initiatives are in place with detailed and concrete action plans, and with rigorous follow-up mechanisms.

 Growth is controlled by a sound Risk Management System and disciplined cost management.

 Small & Medium scale enterprises SMEs need immediate attention from merchant bankers to get access to finance.

 SMEs are facing stiff competition from large scale companies.

BIBLIOGRAPHY

BOOKS REFFERED 

Merchant Banker – H.R. SUNEJA



Merchant Banking Principles & Practices- H.R.MACHIRAJU



Merchant Banking in India-

B.C. LAKSHMANNA & C.N. KRISHNA NAIK 

Merchant Banking – J.C.VERMA (3rd & 4th Edition)

WEBILOGRAPHY

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www.google.co.in



www.yahoo.com



www.economictimes.com

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www.jmmorgansranley.com

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www.dspml.com

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www.sebi.com

ANNEXURE

Respondent’s Profile Name

:_______________

Age

:_______________

Gender

:_______________

Occupation :_______________

1. Do you take any financial services from bank?

(a) Yes

(

)

(b) NO

( )

2. Do you know about Merchant Banking? (a) Yes

(

)

(b) No

( )

3. Are you satisfied with the services provided by your bank? (a) Yes (

)

(b) No

( )

4. Which bank provide you maximum services? (a) ICICI ( )

(b) SBI

(

(c) PNB

(d) BOI

( )

( )

)

(e) OTHER(specify)

5. What is the position of Merchant Banking in Private Sector? (a) Good (c) Bad

( (

)

(b) Normal

( )

)

6. What is the position of Merchant Banking in Public Sector? (a) Good (c) Bad

( (

)

(b) Normal

( )

)

7. What type of security have you deposited/you will deposit with the banks (a)Bank security

( )

(c) Land paper

(

)

(b) Gold

( )

(d) Third party security ( )

8. Are you satisfied by Security margin of bank?

(a) Yes

(

)

(b) No

( )

9. Non-financial institution depends on merchant banking. Are you satisfied? (a) Yes

( )

(b) No (