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Unit 8: Banking Systems

finance at concessionary interest rates, in particular export credit agencies in the UK Notes
(ECGD), USA (EXIM Bank), Japan, Italy, Norway, East Germany (HERMES), and
who enjoy lines of credit from France (COFACE), Korea, Spain, Austria, Canada,
Denmark, and India.
Providing assistance in foreign collaborations through:

Helping locate foreign collaboration and joint venture partners abroad.
Providing advice on local laws, product risk, government regulations regarding
shareholdings, exchange restrictions, taxation, dividends, incentives and subsidies,
etc.

Brokering Fixed Deposits

Following are the services rendered by merchant bankers in this regard:
1. Computation of the amount that could be raised by a company in the form of deposits
from the public and loans from shareholders.
2. Helping the company of observe all the rules and regulation in the connection.
3. Making arrangement for payment of interest amounts.
4. Drafting of advertisement for inviting deposits.

5. Filing a copy of advertisement with the Registrar of Companies for registration.
6. Providing advice to the company on the terms and conditions of fixed deposits, and
deciding on the appropriate rate of interest, keeping in view the prevailing capital and
money market conditions.

Mutual Funds

Mutual funds are institutions that mobilize the savings of innumerable investors for the purpose
of channelling them into productive investments in a wide variety of corporate and other
securities.
Some of the services rendered by mutual funds are as follows:
1. Mopping up public savings.

2. Investing the funds in a diversified portfolio of shares and debentures belonging to well
managed and growing companies.
3. Earning investors a steady return on investments with an assurance of capital appreciation.

Relief to Sick Industries

Merchant bankers extend the following services as part of providing relief to sick industries:

1. Rejuvenating old-lines and ailing units by appraising their technology and process,
assessing their requirements and restructuring their capital base.
2. Evolving rehabilitation packages which are acceptable to financial institutions and banks.

3. Exploring the possibilities of mergers/amalgamations, wherever called for.

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