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What structure a merchant banker provide in India?

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Merchant banker is a company and is a combination of consultancy and banking services. Activities of the merchant banker in India are regulated by SEBI (merchant banker) rule 1992.

As per SEBI rule:

Any person who is engaged in the business of issue management either by making arrangement regarding buying, selling or subscribing to securities or acting as manager, consultant or rendering corporate advisory services in relation to such issue management.

It may perform some of its services like investment bank but can’t an as regular bank. These are specialized banker accept and underwrite or syndicate equity or bond issues.

Services provided by merchant banker:

  1. Counseling the project

  2. Estimating the funds required for the project

  3. Forecasting and market survey

  4. Fundraising from capital market

  5. Fundraising through new investment

  6. Merger and amalgamation

  7. Loan syndication

  8. Financing for working capital

  9. Venture capitalist

  10. Lease financing

  11. Factoring

Categories of the merchant banker

Category

Role

Fees charged

Category I

  • Issue management

  • Advisor

  • Consultant

  • Manager

  • Underwriter

  • Portfolio manager

2.5 lakh for first 2years

1.5 lakh for the 3rd year

Category II

  • Advisor

  • Portfolio manager

  • Consultant

  • Underwriter

  • Co-manager

1.5 years for the first 2 years

50000 for the 3rd year

Category III

  • Underwriter

  • Advisor

  • Consultant

Minimum 50000

Process, fee & forms for the license of merchant banker:

  1. No person shall carry on activity as merchant banker unless he holds a certificate granted by SEBI

  2. A merchant banker is required to have a minimum net worth of not less than 5 crore

  3. An applicant required to send application form Along with additional information along with a non-refundable fee of 50000 by way of demand draft.

  4. Every merchant banker is required to pay 20 lakh as registration fee (as per SEBI regulation, 2014) at the time of grant of the certificate of initial registration by SEBI.

And this certificate of initial registration remains for 5 years. The merchant banker has to apply for the grant of the certificate of permanent to SEBI, 3 months before the expiry of the validity of the certificate of initial registration, if it wishes to continue as registration, a merchant banker.

  1. For permanent registration, merchant banker is required to pay 9 lakh for the first block of 3 years towards permanent registration payable in term of schedule iii of SEBI regulation 1992.

  2. Merchant banker is required to take SEBI’s prior approval for change in control.

AADDITIONAL INFORMATION SHEET

In addition to the information furnished in form A, the applicant is also required to furnish the detailed information on the following areas, as per the instructions contained therein.

1. Memorandum and Article of Association of the applicant

2. Provide the UIN obtained under MAPIN for the applicant.

3. Details of Directors/ Promoters & shareholding pattern

4. Details of Key personnel

5. Details of infrastructure facilities

6. Details regarding registration as NBFC

7. Financial Accounts of the applicant

8. Report from principal bankers

9. Details of associated registered intermediaries

10. Undertakings

11. Enclosures

12. Declaration by at least two directors

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Corpseed Admin
Corpseed Admin