Merchant Banking: Role in Capital Markets and Status of Merchant Banking in India

Merchant Bank call it as Investment Bank also, And these banks are most significant institutions in the financial market of the developed countries; Merchant bank providing investment and financial options to the corporate sector; Merchant bank performing along with commercial bank in Europe and Investment Bank are prohibited from carry on the commercial banking activities; 

Merchant banking responsible for the managing the capital market activities; There are crucial benefits of the Merchant Banking to their clients; 

Status of Merchant Banking Sector in India 

Merchandise banks like HDFC | IDFC | ICICI | SBI are the leading and successful example of merchant banking service and they are working and performing to the Indian economy as growth driver to the corporate client to individual banking services; These are the merchant banks which are founded to the purpose of ordinary individual to corporate sectors, housing development, industrial development, micro - rural financial & investment and corporate finance purpose; 

The Grindlays bank was the first bank which formally initiated merchant banking activities by setting up a merchant banking division in 1967. Citi Bank was next to start merchant bank in 1970; After two years of the state bank of India entered in the field in 1992; Today the large number of banks, financial institutions and private sectors organization providing merchant banking service; 

There are some very important initial services provided by merchant banking like: Underwriting Securities, bill discounting, project finance, capital finance and technical advice were offered by commercial banks, development banks, insurance and other organizations in India long before the appearance to formal merchant banking services; 

India got economics, financial, investment, reconstructed, newly planned in the 1990s post the liberalization, globalization and privatizations. These reforms are causes to the tremendous growth driven development via the merchant banking in India; A large numbers of commercial nationalized banks have set up the divisions or subsidiaries for offering the merchant banking services; 

“Issue Management” is top most activity among all offering services and State Bank of India [ SBI ] has the largest share of merchant banking as 23 % market share by assets and 25% total share of loan and deposit market; And SBI holding largest network, branches and customer base;