Merchant Banking in India- Overview, Role & Services

Merchant Banking in India- Overview, Role & Services

Banking is a very important factor in our day-to-day economy. It not only keeps all the money safe but also allows it to flow freely, as it would help many people in need flourish. 

However, finding the right banks for you is also very important for you to choose which kind of bank is beneficial to you. 

As it is completely based on money, choosing a bank can be the ultimate deciding factor for your future. 

However, keeping money safe can sometimes be an afterthought for many as they can easily find means to keep it safe. The main issue that many look for is consultancy. 

This is important when it comes to businesses, as getting expertise is what helps a business flourish. 

This is where merchant banking in India plays a massive role. If you have a corporate business, then merchant banking might be ideal.

Introduction of Merchant Banking

A merchant bank is a firm that delivers advice to clients on monetary, administrative, commercial, and legal issues. 

They typically provide aid for large corporations with refinancing, foreign finance, and business loans. These banks are professionals in business operations with international corporations. 

They provide financial advice so the corporate can take wise steps in the correct direction so their business flourishes. 

Commercial banking supports the prosperity of the nation's economy by continuing to act as a conduit of funding and expertise for major corporations. 

Big companies need to take help from commercial banks as it helps them not fall in the form of major losses.

Furthermore, they are keenly important to help a brand follow the market trends of a certain country, get modernised, and expand where there is a large number of the target audience. 

This helps the corporate in the search business and fulfils the needs of people at the same time. 

They also lend a helping hand with share trade registration, purchases, and sales.

Role of Merchant Banking in India

It is to be noted that they only provide services to large corporations, which is what sets them apart from the local commercial banks. 

Such banks could be sections of greater business or investment banks, and they generally execute their business worldwide.

As these banks do not provide money to the companies in a traditional sense, it also means that the returns would be significantly different. 

Sometimes these banks go through the traditional route of the companies paying them back, but there are times when they get equity or some sort of shares of the company as the payback. 

One also needs to understand that the meaning of merchant banking in India differs from place to place. 

Merchant banks are often confused with investment banks; however, they significantly differ from investment banks in terms of function and service providing.

In that case, it means "an individual who is who is involved in the business of issue management either by making arrangements regarding buying, selling or subscribing to the securities as a manager, advisor, consultant concerning such an issue management". 

This means that any person who is included while managing the intricate aspects of a business can be regarded as a merchant banker. 

They provide well-thought-out plans that smartly cater to every single need, demand, and requirement of the client. 

What Are The Roles Of Merchant Banking In India?

  • Works as a stock broker.
  • Works in improving promotional activities. 
  • Works as an underwriter. This helps the company or business appear and be more reliable and trustworthy as corporations usually have to take on big risks. They also give the general public information and encourage them to buy the company's stocks. 
  • Helps the company better understand their finances, especially the total costs that will be required. This helps the company prepare well in advance for the same and take the necessary precautionary steps. 
  • Helps initiate credit.
  • Delivers a diverse range of economic solutions.
  • Provides counselling. This helps the people thoroughly understand their project, whether it would be right for them, risks, budgets, how to move forwards, etc.
  • It is the responsibility of the merchant banker to structure and manage the company’s profile. They also make investments on the company’s behalf.
  • They ensure that all the necessary registrations are done and cleared.
  • It ensures that the company always stays legal, i.e. the company follows all the mandatory rules and regulations. 
  • It works towards arranging, managing, and monitoring foreign money. 
  • Provides tax counselling. 
  • Works towards providing them with instructions regarding the date and dividend rate.
  • Helps retrieve innovative sponsors for contract negotiations like purchases and mergers.
What Are The Various Features of Merchant Banking?
  • The organisation's structure is comparatively loose compared to the corporate banks.
  • The ratio of liquid money is significantly high.
  • It has a vast knowledge of the market and how to go about it.
  • allows having direct and brief contact with the environment.
  • As they are well versed in their knowledge, the action of taking a decision is much faster.
  • They also provide the client with high-quality services.

Services Provided by Merchant Bankers

As mentioned, many services are provided by merchant banking in india and crucial ones at that. 

With the wave of globalisation, it has become extremely important for companies to look into merchant banking as it helps them understand the market better. 

It helps a corporation stay on top of the constant struggle and competition. It helps a corporation better understand if the risk is worthy or not. 

This allows them to pitch in ideas where they have a potential chance at raising their business and have a comparatively low loss rate. 

They are also responsible for thoroughly assessing the clients when presenting a deal, as this is crucial for businesses. 

They also offer their clients management advice as well as administer stock distributions and bond interest.

Also check,

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Furthermore, it also widens their area of services by helping them navigate through the economies of various countries. 

The counselling they provide helps them have a realistic approach to their project and figure out ways to get higher returns. 

Moreover, it is significantly important for making the design structure for the project, which essentially acts as the project's backbone. 

It has been seen over the years that the demand for merchant banking is ever increasing as it has helped many corporations steer to high progress, returns and incomes. 

Opting for the right merchant banks is always there to guide you through every stage of your business. 

It not only provides you with opinions that help you improve your business tactics but also helps solve any problems you face. 

If you are someone who is looking to opt for merchant banking in India, do go for it as it not only helps shape your company but also sheds light and helps you follow the path that leads to success!


1. Is merchant banking services available to the general public?

Merchant banks do not provide services to general people. However, it is extremely beneficial to people who work in big corporations. It helps them enhance their business practices and function well in the market. 

2. What is the basic role of a merchant banker?

There is a diverse role of merchant bankers in the market, and it helps business manage their finances. With their high knowledge, they help them sort out any forms of problems occurring in their client's businesses.

3. What is the main responsibility of a merchant banker?

The responsibility of a merchant banker also includes taking care of the legal aspects of the businesses. This also includes registration and trading aspects.

4. What do merchant bankers do?

They have to be very keen with their details as they help out their client’s businesses with advice on where to take the necessary risks. They are also responsible for handling the planning and advertisement part of the business. 

5. Who are merchant bankers?

Merchant bankers help people understand the costs, spending, and profit ratio to prepare accordingly with all the steps.

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