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Merchant Banking
MB is a combination of Banking and Consultancy
Services.
Consultancy means to provide advice, guidance and
services for a fee. It helps to raise finance. It helps to
expand and modernize the business.
It helps to review sick business units. It also helps
companies to register, buy and sell shares at the
stock exchange.
It provides consultancy to its clients for financial,
marketing, managerial and legal matters.
Origin
1) Assist in raising capital in the form of 1) Provide funds in the form of term
equity, preference shares, and loan and working capital.
syndicated loan working capital
instruments.
3) Do not accept chequable deposits. 3) Demand deposits are the key feature.
5) Being advisors, they are closer to the 5) Being lenders, they are more
customers and get to know risks of the cautions, assess risks in lending
transaction s properly. They work on proposal and cannot afford to be
risks shields i.e. mitigation measures grossly relationship based and close to
the customer.
7) Merchant banks cater to the needs of 7) They cater to the needs of the
corporate firms. common man.