Merchant Banker Registration |

Who is a Merchant Banker?

As per the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, a merchant banker is characterized under section 2 clause (cb) as any individual who is occupied with the business of issue management either by planning in regard to purchasing, selling or subscribing to securities or going about as an expert, manager or delivering corporate advisory assistance related to such issue management.

Merchant bankers instruct business visionaries right from the stage regarding the origination of the venture till the initiation of production and they are accountable for the issue process. Merchant bankers go about as mediators between the organizations and the financial backers. They take liability for the planning of the outline and marketing the issue.

Instances of Merchant Banking in India

In India, there exist public sector, private sector, just as foreign merchant bankers in the merchant banking industry. Some of them are recorded underneath:

Public sector– IFCI Financial Services, Bank of Maharashtra, Karur Vysya Bank Ltd, SBI Capital Markets, Punjab National bank, State Bank of Bikaner, and Jaipur

Private sector- Tata Capital Markets, Kotak Mahindra Capital Company, Reliance Securities, Yes Bank, ICICI Securities, Axis Bank, Bajaj Capital

Foreign Merchant Bankers– Bank of America, Citigroup Global Markets India, DSP Merrill Lynch Ltd, FEDEX Securities Ltd, Goldman Sachs (India) Securities, Morgan Stanley India, Barclays Securities (India)

Classes of Merchant Banker

Classes	Activities	Least Net Worth Requirement
Classification I	Merchant bankers can go about as issue managers, counselors, advisors, underwriters, and portfolio directors. They perform the action of the issue management, planning of the outline, deciding financial structure, final allotment, and tie-ups of underwriters.	Net worth capital of INR 5 Crores
Classification II	Such merchant bankers can go about as counselors, specialists, underwriters, co-directors, and portfolio managers.	Net worth capital of INR 50 Lakhs
Classification III	Such merchant bankers can go about as underwriters, counselors, and specialists. They can neither perform issue management activity of their own nor do they go about as co-director. They can’t embrace the activities of the portfolio manager.	Net worth capital of INR 20 Lakhs
Classification IV	Merchant Bankers can simply act just as a specialist or counselor to an issue.	Zero capital

About Merchant Banking License

Merchant bankers are needed for managing global business sectors for obtaining monetary assistance and consolidating business and trading in the worldwide market. There are numerous merchant banks previously settled and have offered the best financial assistance to the best of capacities; yet there is a necessity and extension for some more merchant bankers, with the ordinary increment of international interest in the Indian market. Accordingly, a lot more individuals are looking into offering merchant banking services. To build up merchant banks, a permit from SEBI is required.

Concerned Authority/Regulatory Authority for Establishing Merchant Bank

The SEBI i.e., Securities and Exchange Board of India is the administrative expert for Merchant Banking in India. The law which controls the activities of the Merchant Bank in India is the SEBI (Merchant Bankers) Regulations 1992. For setting up a Merchant Bank, the concerned individual needs to move towards the SEBI.

The other administrative authority is the Reserve Bank of India. Additionally, the Foreign Exchange Management (International Financial Services Centre) Regulations, 2015 are applicable to monetary organizations which cover merchant banks under Section 2 of clause (b) explanation. Banking Institutions performing merchant banking activities are likewise needed to follow the criteria set down in the prudential openness exposure standards recommended by RBI, also the statutory restrictions contained in Section 19(2) and (3) of the Banking Regulation Act, 1949.

Process for acquiring Merchant Bankers license

The application shall be filed in form A to the board for seeking a certificate.
Application filed should be in confirmation of the essential requirements.
All the relevant information should be disclosed and furnished and if required should meet the board in person.
Then the application will be considered by the board analyzing that it follows all the said requirements.
Capital adequacy requirements should be abided by.
Once the application has been made the applicant needs to pay the registration fees as per schedule II.
Once all the requirements are fulfilled the board shall grant a certificate in form B to the applicant.

Documents needed for Merchant Banker License

For registration, the Merchant Banker, applying as a candidate is needed to pay a non-refundable application charge of INR 50,000/ – via Demand draft in favor of ‘Protections and Exchange Board of India’, payable at Mumbai.
Form A- Apart from the data that is given in Form A and additional data must be submitted
Memorandum of Association and Articles of Association
Give the UIN got under MAPIN for the candidate
Directors/Promoters and shareholding design details
Key workforce details
Details of infrastructural facilities
Insights about registration as NBFC
Monetary Accounts of the candidate
Report from principal financiers
Details of related registered intermediaries
Affirmation by at least two directors
The application can be made online through the SEBI portal.
Application for a merchant bank ought to affirm the prerequisites.
The application, alongside the essential fees, must be submitted to the accompanying location: Market Intermediaries Regulations and Supervision Department Division 5 Securities and Exchange Board of India, SEBI Bhavan, Plot No. C4-A, ‘G’ Block, Bandra-Kurla Complex, Bandra, Mumbai – 400051

Fundamental prerequisites of Merchant Banking Company

Merchant Banking Company will conform to the provisions of the SEBI Act 1992.
Merchant Banking Company should not participate in some other monetary exercises as referred to in section 45I(c) of the RBI Act 1934.
To open a merchant banking company a base capital required is INR 5 crore for class 1, INR 50 Lakhs for classification 2, INR 20 Lakhs for class 3.
Merchant Banking Company can’t acknowledge or hold public deposits.
The Merchant Banking Company is a corporate body other than a Non-Banking Financial Company as referred under the RBI Act.
Merchant Banks should not take part in any activities other than those associated with the securities market.
Merchant Banking Company should have at least 2 workers holding prior knowledge and experience in merchant banking.
Merchant Banking Company should not relate to some other institution if either directly or indirectly registered as a merchant banker.
Merchant Bankers should not have been viewed as liable for any economic offense.

Services provided under Merchant Banking License

Project Counseling
Debt management and equity offerings
Issue management
Public issue underwritings
Portfolio management
Rebuilding Strategies
Offshore Finance
Non-resident Investment
Corporate and advisory services
Loan Syndication
Pre-investment research
Venture Capital financing
Rent financing

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We assist our customers with helping them to tackle business issues and to ensure persistent networking of your business.
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