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Since 17th and 18th century there has been a presence of merchant banking in the society of Italy and France. Some of the biggest merchant banks in the word are Citibank, Bank of America, UBS investment bank etc. Lending to and investing in businesses have typically been the main responsibilities of a merchant bank. Within the perspective of contemporary Britain, it is equivalent to an investment bank. Mediaeval businesses, particularly textile merchants, founded these banks, which later evolved into modern financial institutions. Notably, in 1970, Citibank partnered with National Grindlays Bank to launch merchant banking in India. In 1973, the State Bank of India established a distinct Merchant Banking Division, which ICICI took over in 1974.
In merchant banking, specialised financial services along with banking services, are given to companies, organisations, governments, or individuals with high incomes. Merchant banking is a type of professional service given to its clients in relating to financial matters. Financial services such as advising, underwriting, trading in securities, etc, are given in merchant banking by the merchant bankers. A merchant bank will never give its services to general public. People often confuse investment banks with merchant banks.
A merchant banker plays the role of an intermediary in between the customers and the financial market. A merchant banker will assist the clients in capital raising, risk management, and investing. A merchant banker will alone play many roles like broker, lender, financial advisor, manager for portfolio, underwriter, etc. Merchant bankers play a variety of roles in the market, which aids businesses in managing finances. With their extensive experience, they assist in solving any issues that can occur in the corporations of their clients.
A formal permission which is given by an authority or the government to carry out some specific activities is called a license. The license which is needed by the merchant bankers to work is known as a merchant banking license. The application to grant a license or certificate can be made in Form A to SEBI. Along with the license, a fee is to be paid, which will be non-refundable.
If the application is approved, the Board will issue a certificate of initial registration in Form B and inform the applicant. The validity of the certificate will be of five years from the date of application. The same procedures that are used to handle new requests for the issuing of certificates of initial registration must also be used to handle applications for permanent registration.
Merchant banking mainly offers high-income individuals, companies, & governments specialized financial support. Merchant bankers act as brokers who offer services for investment advising, risk management, and capital raising. One needs a merchant banking licence, which has stringent standards, to do these operations.
A license given to a merchant bank to carry his duties is known as a merchant banking licence.
The cost of a merchant banking license is Rs twenty lakhs.
When a merchant bank which is professional institution that offers financial advices to its clients, this is known as merchant banking.
The minimum eligibility of merchant banking in category 1 is five crores, fifty lakhs for category 2 and for category 3, it is twenty lakhs.
To get a merchant banking licence, you will have to apply by filing Form A
To obtain the merchant banker's license, the applicant first has to apply by filing the application Form A. All the minimum criteria are to be fulfilled by the applicant. The prescribed fees is to be paid, and after this the board will grant a certificate.
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