A

SYNOPSIS ON

“MERCHANT BANKING IN INDIA”

AT

“ICICI BANK LTD”

Submitted in partial fulfillment of the requirement for the award of the

MASTER OF BUSINESS ADMINISTRATION

BY

MOHAMMED AZHARUDDIN

H.T NO: 1422-21-672-136

Department of management studies

CSI INSTITUTE FOR P.G. STUDIES

(Affiliated to Osmania University)

EAST MARREDPALLY, SECUNDERABAD, TELENGANA

2021-2023
 INTRODUCTION

Original Definition: A Merchant Bank is a British term for a bank providing various financial

services such as accepting bills arising out of trade, providing advice on acquisitions,

mergers, foreign exchange, underwriting new issues, and portfolio management.

The Focus Definition: 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. Because a merchant bank acts not only as an advisor and 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 article is about the history of banking

as developed by merchants, from the Middle Ages onwards.

Amidst the swift 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 & corporate sector & advice entrepreneurs what to do to be successful.

The merchant banking has been defined as to what a merchant banker does. A merchant

Banker has been defined by Securities Exchange Board Of India (Merchant Banker) rules,

1992, as “Any person who is engaged in the business of issue management either by making

arrangements regarding selling, buying or subscribing to securities or acting as manager,

consultant, advisor or rendering corporate advisory services in relation to such issue

management
Present scenario of Indian Merchant Banking

U.S Stock Market Listings of Fast- Growing Indian Companies: An innovative financing

OptionNew York, Feb 17 08 /PR Newswire/ Emissary Capital, LLC A merchant bank based

in New York City and specializing in Indian Companies, is a pioneer firm leading the charge

for Indian Companies to obtain stock market listings in the U.S and European investors in

conjunction with a U.S public company with market listing. This turns a fast growing Indian

company into U.S public company with the prestige and capability to raise money from U.S

and European institutional investors. Focus on small and medium enterprises (SMEs). SMEs

are dynamic force in India fall under this category.

India’s strength in Information Technology sector is well known, but it is India’s fast

growing manufacturing sector, driven by approximately three million SME`s in sectors

ranging from auto components to industrial goods, that is rapidly India a leading global

manufacturing hub. Debt Financing is not the answer for SME`s. There seems to an across

the board consensus that Indian SME`s have not been able to fully tap their potential and

keep pace with India’s growth because of their inability to access greater sources of

financing. For vast majority of Indian SME`s, the high domestic interest rate regime (prime

rate of 12.75% to 13.25%) continues to be a substantial hindrance. Furthermore, the ability to

raise debt financing outside India (typically referred to as External Commercial Borrowings

(ECBs) is strictly regulated by RBI. No IPO boom for Indian SMEs in Indian stock markets.

The Indian stock markets including the BSE & NSE have essentially ignored robust Indian

SMEs. The avg. size of Indian IPO rose to approximately $100 million in 2008-09.

Meanwhile smaller Indian companies seeking to raise funds of less than that amount have

found it increasingly difficult to raise funds through Indian Stock Markets listings.
According to SEBI only 104 companies raised capital in the range of $2.5 million to $125

million in March 2007 fiscal year. No companies have raised money in the $1.25 million to

$2.5 million range since April 2007. Finally, only 52 companies have been able to raise funds

in the range of $2.5 million to $125 million in March 2008 fiscal year. There are few smaller

Indian IPOs because Indian merchant bankers prefer to work on bigger IPOs that earn them

bigger, as the work required for a small IPO compared to a large IPO is relatively the same.

Also the regional stock exchanges, where the majority of SMEs would list themselves if

possible, face stiff competition from India’s two major stock exchanges BSE & NSE.

Emissary Capital Ltd. Is a full service merchant banking firm which specializes in assisting

fast growing Indian companies in obtaining financing and U.S stock market listings as well as

identifying and advising on mergers & acquisitions transactions for such companies.
NEED & IMPORTANCE 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

reliefs, other statutory relaxations, good return on investment and capital appreciation in such

investment to motivate them to invest their savings in securities.

 Thus, the merchant bankers help industry and trade to raise funds, and the investors to

invest their saved money in sound and healthy concerns with confidence, safety and

organizations for higher yields.

SCOPE OF THE STUDY

The main focus of the study would be on functioning of the Merchant Banking companies.

The study would have information and details of Merchant Banking of public sector and

private sector companies and then an analysis will be done on the collected information and

finally a comparison between these two categories will be done. After comparison it would

be find out which category has more growth potential in present scenario as well as in future.

 It would help us to develop the ability to study the functioning of Merchant Banking in

India & learn & apply multidisciplinary concepts, tools & techniques to solve vital problems.

 It familiarizes with the various services provided by Merchant Bankers.

 They would help us to draw comparison between public & private sector companies

engaged in Merchant Banking activities.

 Based upon the comparison, it would help us to determine which sector has more growth

potential & where should one invest his/her funds to maximize the return at minimum risk.
OBJECTIVES OF THE STUDY

 To understand the nature and prime objective of merchant banking.

 To study the Merchant banking’s role in Indian economy.

 To understand the services provided by merchant banking.

 To study the concept of Merchant Banking

 To develop the ability of studying the functioning of Merchant Banking in India and learn

& apply multidisciplinary concepts, tools & techniques to solve vital problems.

 To compare the public & private sector companies engaged in providing merchant

banking services on various grounds.

 To study the role of merchant banking in the raising capital

 To find out the growth potential of the Merchant Banking in public & private sector

companies.
RESEARCH METHODOLOGY

1.4 DATA COLLECTION

The study is both descriptive and analytical in nature. It is a blend of primary data and

secondary data The primary data has been collected personally by approaching the online

share traders who are engaged in share market. The data are collected with a carefully

prepared questionnaire. The secondary data has been collected from the books, journals and

websites which deal with online share trading.

Source of data

Primary Sources: The primary data was collected through structured unbiased questionnaire

and personal interviews of investors. For this purpose questionnaire included were both open

ended & close ended & multiple-choice questions.

Secondary Sources: The secondary data collection method includes:

• Websites

• Journals

• Text books

Method Used For Analysis of Study

The methodology used for this purpose is Survey and Questionnaire Method. It is a time

consuming and expensive method and requires more administrative planning and supervision.

It is also subjective to interviewer bias or distortion.

Sampling Unit: Businessmen, Government Servant, Retired Individuals

Statistical Tools: MS-excel and pie and bar diagrams are used to analyze the data.
LIMITATIONS OF THE STUDY

 Due to paucity of time only limited information can be collected.

 There can be a possibility of “individual biasness” on the part of respondents.

 Study would be confined to only 7-8 public & private sector merchant banking companies.

 Sample size to be taken may not be the true representative of the population.
 BIBLIOGRAPHY
1.A Sharma, “Marketing of financial services in India with special reference to merchant
banking”, Doctoral dissertation, University of Jammu, 2002

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Bangladesh (2017), ISSN:1946-052X

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India,(2016), E-ISSN:2455-295X.

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BOOKS REFFERED

1. Merchant Banker – H.R. SUNEJA

2. Merchant Banking Principles & Practices- H.R.MACHIRAJU

3. Merchant Banking in India-B.C. LAKSHMANNA & C.N. KRISHNA

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

NEWSPAPERS

Economic Times

WEBSITES

1. www.google.co.in

2. http://www.citibank.com

3. www.yahoo.com

4. www.economictimes.com

5. www.jpmorgansranley.com

6. www.iccibank.com