Importance Of Merchant Banking

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Merchant Bankers act as a link between corporate bodies who intend on raising funds and investors who are interested in investing in securities. It helps corporates establish new companies, expand, diversify, merge, commission projects etc. Apart from that, merchant banking was the necessity of banks themselves which were in need of non-fund based income so as to improve their profitability margins by all means in the changed economic scenario. Merchant Banking is known by different names in different places. In the USA, it is known as “Investment Banking”. In the UK it is known as “accepting and clearing houses”. Definitions of Merchant Banking (1) A Merchant Bank is a bank or financial institution that handles all the tasks related to…show more content…
It is a process of examining the technical, commercial, financial and economic viability of a project to ensure that it generates sufficient returns on the resources invested in it. The study of viability involves detached verification of project’s ability to stand the tests of technical, financial and commercial feasibilities and management’s capabilities to successfully implement and run the project. A service project report will be prepared for the company, including finalization of capital structure. Project appraisal…show more content…
The lead merchant banker ensures that a copy of the abridged prospectus accompanies every application form distributed by the company. The abridged prospectus contains general information about the company and the issue, risk factors and issue highlights, capital structure of the company , terms of the present issue , authority for the issue, terms of payment and procedure and time schedule for the allotment and issue of certificates. It also contains information on the availability of forms, prospectus and mode of payment; Application requirements by NRIs; particulars of the issue; information on the company, its management and projects, products and future prospects; stock market data; particulars of listed companies under the same management; basis for issue price; and financial performance of the company for the last five years have to be given as well. The issuer cannot offer any incentives to prospective investors by way of medical insurance scheme, lucky draw, prizes and so

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