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Indian Financial System

Notes 8. Non-resident Investment: The services of merchant banker includes investment advisory
services to NRI in terms of identification of investment opportunities, selection of securities,
investment management, and operational services like purchase and sale of securities.
9. Loan Syndication: Loan syndication refers to assistance rendered by merchant bankers to
get mainly term loans for projects. Such loans may be obtained from a single development
finance institution or a syndicate or consortium. Merchant bankers help corporate clients
to raise syndicated loans from banks or financial institutions.

10. Corporate Counselling: Corporate counselling covers the entire field of merchant banking
activities viz. project counselling, capital restructuring, public issue management, loan
syndication, working capital, fixed deposit, lease financing acceptance credit, etc.

Task Compare the working of merchant banks in India with those of European Union
and discuss where we need to move ahead to match the pace.

12.3 SEBI Guidelines Regarding Merchant Banking

Without holding a certificate of registration granted by the Securities and Exchange Board of
India, no person can act as a merchant banker.
Only a body corporate other than a non-banking financial company shall be eligible to get
registration as merchant banker.
The categories for which registration may be granted are given below:
1. Category I – to carry on the activity of issue management and to act as adviser, consultant,
manager, underwriter, portfolio manager.
2. Category II – to act as adviser, consultant, co-manager, underwriter, portfolio manager.
3. Category III – to act as underwriter, adviser or consultant to an issue.
4. Category IV – to act only as adviser or consultant to an issue.

Did u know? The capital requirement depends upon the category. The minimum net worth
requirement for acting as merchant banker is given below:
1. Category I – ` 5 crores
2. Category II – ` 50 lakhs
3. Category III – ` 20 lakhs

4. Category IV – Nil
5. An application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers)
Regulations, 1992. SEBI shall consider the application and on being satisfied issue a
certificate of registration in Form B of the SEBI (Merchant Bankers) Regulations, 1992.
6. ` 5 lakhs which should be paid within 15 days of date of receipt of intimation regarding
grant of certificate.
7. The validity period of certificate of registration is three years from the date of issue.
8. For renewal, three months before the expiry period, an application should be submitted
to SEBI in Form A of the SEBI (Merchant Bankers) Regulations, 1992. SEBI shall consider

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