Merchant bankers are registered with which of the following entities

Table of Contents • • • • • Introduction A merchant bank is an organization that acts as an intermediary between the issuers and the ultimate purchasers of securities in the primary security market. Merchant banks are often instrumental in driving economic development of a country as they act as a source of funds and information for corporations, facilitating complex transactions. The formal beginning of merchant banking can be traced back to 1967 when the Reserve Bank of India provided a license to the Grindlays Bank. Citibank started the merchant banking services in 1970 and the State Bank of India followed the same in 1972. Entities that can function as merchant bankers Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992 define Merchant Banker 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, adviser or rendering corporate advisory service in relation to such issue management” while ‘Issue’ is defined as “an offer of sale or purchase of securities by any body corporate, or by any other person or group of persons on its or his or their behalf, as the case may be, to or from the public, or the holders of securities of such body corporate or person or group of persons through a merchant banker”. Thus, a merchant banker is a person who is engaged in the business of consulting, managing and/or advisin...

In this article, Parth Sarthy Kaushik elaborates on how is merchant banking regulated in India. Merchant banking comprises a wide set of banking activities which involves issues management by trading in securities, underwriting security issuances (e.g. an IPO), undertaking valuation of businesses and setting up and packaging M&A deals. In business parlance, it is distinguished from commercial banking, which largely revolves around accepting deposits and giving loans (nowadays, commercial banks also provide additional services such as bill payments, certificates of deposits etc.). Securities and Exchange Board of India (SEBI) is the regulatory authority for merchant banking in India. Activities of merchant banks are regulated by the SEBI (Merchant Bankers) Regulations, 1992. As per RBI’s Master Circular on Para-Banking activities, banks are allowed to undertake merchant banking activities through a separate subsidiary which would be required to comply with SEBI regulations. Banking Institutions performing merchant banking activities are also required to follow the requirements laid down in the prudential exposure norms prescribed by RBI, as well as the statutory limits contained in Section 19(2) & (3) of the Banking Regulation Act, 1949. Merchant banking can also be pursued by entities other than banks (however, they should not be NBFCs as defined under the RBI Act), provided they are registered with SEBI. In case a bank pursues merchant banking activities, it would need...

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SECURITIES AND EXCHANGE BOARD OF INDIA NOTIFICATION Mumbai, the 30th March, 2021 SECURITIES AND EXCHANGE BOARD OF INDIA (MERCHANT BANKERS) (AMENDMENT) REGULATIONS, 2021 No. SEBI/LAD-N RO/GN/2021/13.—In exercise of the powers conferred under Section 30 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to amend the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, namely: – 1. These regulations may be called the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2021. 2. They shall come into force on the date of their publication in the Official Gazette. 3. In the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, – I. In regulation 2, i. in clause (aa), the words and symbols ―clause (7) of section 2 of the Companies Act, 1956 (1 of 1956)‖ shall be replaced with the words and symbols ―clause (11) of section 2 of the Companies Act 2013(18 of 2013 ii. in clause (ad), in sub-clause (i), the words and symbols ―regulation 12 of the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 1997‖ shall be replaced with the words and symbols ―regulations framed under clause (h) of sub-section (2) of section 11 of the Act; iii. clause (f) shall be omitted; iv. after clause (f), the following new clauses shall be inserted, namely- ”(g) ”underwriter means a person who engages in the business...

A merchant bank is one that offers services such as private equity (investing in exchange for partial ownership), fundraising, and business loans to privately owned organizations. Rather than serving consumers, they work with companies. Many of the largest banks that provide consumer banking divisions also provide merchant banking services to specialty clients. Merchant banks are similar to investment banks in many of the services they provide, but they tend to attract a different type of client. Merchant banks often work with private companies that have different needs than publicly traded corporations . Merchant bankers serve their clients by providing capital (money) and advisory services, among other things. Merchant banks often help guide companies through mergers and acquisitions. Suppose a privately owned tech company in the United States wanted to buy another up-and-coming tech company. The company might hire a merchant bank to help it through the process. The merchant bank would advise the tech company and address any roadblocks that might come up throughout the process. The financial institution might also provide the company with a business loan to finance the deal, or even make an investment in the company to provide capital for the purchase. A merchant bank is like a specialty store that sells tools to construction companies… Many consumers find themselves needing to buy tools and hardware for small projects they’re working on at home. But certain buyers, such...

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