MERCHANT BANKING

by prachi

CONTENTS Definition Origin About Services Scope in India Merchant Banking Structure in India Main Merchant Banking Companies Commercial Banking Vs Merchant Banking Merchant Account Methods of processing credit cards How to start a merchant account Required documents How to apply for merchant account Merchant banker Categories of Merchant Bankers Qualities of Merchant Bankers

DEFINITIONS

A merchant bank is a financial institution providing capital to companies in the form of share ownership instead of loans. A merchant bank also provides advisory on corporate matters to the firms in which they invest.

ORIGIN

Merchant Banking started in Italy in the middle ages.

Reached in France during 17th centuryIn England, Merchant Banking was introduced in

18th century.Merchant banking came to India through

Grindlays Bank in 1967 and City bank in 1970.SBI started the merchant banking division in

1972.

SERVICES

Corporate counsellingProject counsellingWorking capital financePortfolio managementRestructuring strategiesCredit syndicationLease financing Other services

SCOPE IN INDIA

Growth of new issue marketEntry of foreign investorsChanging policy of Financial InstitutionsDevelopment of debt market

MERCHANT BANKING STRUCTURE IN INDIA

MERCHANT BANKS

PUBLIC SECTOR PRIVATE SECTOR INTERNATIONAL BANKS(10)

COMMERCIAL BANKS (24)

FINANCIAL INSTITUTION (6)

STATE INSTITUTIONS (4)

BANKS (10)

FINANCE AND INVESTMENT (231)

MAIN MERCHANT BANKING COMPANIES

PUBLIC SECTOR PRIVATE SECTOR FOREIGN PLAYERS

SBI capital markets ltd. ICICI securities ltd. Goldman Sachs(India) securities pvt. Ltd.

PNB Axis bank ltd. Morgan Stanley India company pvt. Ltd.

Bank of Maharashtra Bajaj capital ltd. Barclays securities (Indi) pvt. Ltd.

Karur Vysya bank ltd. Reliance securities ltd. Bank of America

State Bank of Bikaner and Jaipur

Kotak Mahindra capital company ltd.

Citigroup Global Markets India pvt. Ltd.

IFCI financial services ltd. Yes bank ltd. DSP Merril Lynch ltd.

COMMERCIAL BANKING Vs MERCHANT BANKING

COMMERCIAL BANKING MERCHANT BANKING

Catering needs of common man Catering needs of corporate firms

Anyone can open an account It cannot be done

Less exposed to risk More exposed to risk

Related to secondary market Related to primary markets

It’s asset oriented It’s management oriented

Plays the role of financers Plays different roles like underwriting, portfolio etc.

MERCHANT ACCOUNT

A Merchant Account is a type of bank account that allows businesses to accept payments in multiple ways, typically debit or credit cards.

METHODS OF PROCESSING CREDIT CARDS

Credit card terminalAutomated response unitPayment gatewayLevel 2 or 3 processingMerchant account marketing Marketing by banksMarketing by Independent Sales

Organization(ISO)

HOW TO START A MERCHANT ACCOUNT

STEP 1: Research merchant account options from banks in local area.

STEP 2: Apply for the merchant account, providing all necessary documentation and information.

STEP 3: Submit to the bank a detailed list of the type of business activities you conduct.

STEP 4: Show proof of a website to the bank, if you are conducting business online.

STEP 5: Pay the application fee and any other required upfront fees for setting up the merchant account.

REQUIRED DOCUMENTS

Business checking accountProof of identificationSocial security number or federal employer

identification numberDetailed statement of business activitiesTax returns and financial statements for businessWebsite(for online business)Secure check out system(for online business)

HOW TO APPLY FOR MERCHANT ACCOUNT

STEP 1: Check your credit history and rating before applying for a merchant.

STEP 2: Apply for an internet merchant account, if you want to process transactions online.

STEP 3: Enter your business name, address and phone numbers.

STEP 4: Provide your company details. STEP 5: List the type of services provided. STEP 6: Provide information about yourself as the business

owner. STEP 7: Enter references, if required. STEP 8: Submit your application to the processor and await a

decision.

CATEGORIES OF MERCHANT BANKERSCATEGORY ROLECATEGORY 1 •Issue management

•Advisor•Consultant•Manager•Underwriter•Portfolio manager

CATEGORY 2 •Advisor•Consultant•Manager•Underwriter•Co-manager

CATEGORY 3 •Underwriter•Advisor•Consultant

CATEGORY 4 •Advisor•Consultant

QUALITIES OF MERCHANT BANKERS

Ability to analyseAbundant knowledgeAbility to build up relationshipInnovative approach

THANK YOU