B Com Exam > B Com Videos > Indian Financial System > Merchant banking - Central Banking, Indian Financial system
Merchant banking - Central Banking, Indian Financial system Video Lecture | Indian Financial System - B Com
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FAQs on Merchant banking - Central Banking, Indian Financial system Video Lecture - Indian Financial System - B Com
| 1. What is merchant banking? |  |
Ans. Merchant banking refers to a specialized banking activity that focuses on providing financial services to corporations and high net worth individuals. These services include underwriting of new securities, raising capital through IPOs, private placements, mergers and acquisitions, advisory services, and managing portfolios.
| 2. What is the role of central banking in merchant banking? | |
Ans. Central banking plays a crucial role in merchant banking by regulating and supervising the banking system. It ensures that merchant banks adhere to prudential norms, maintain financial stability, and operate within the legal framework. Central banks also provide liquidity support to merchant banks during times of financial distress and act as a lender of last resort.
| 3. How does the Indian financial system support merchant banking activities? | |
Ans. The Indian financial system supports merchant banking activities through various institutions and regulations. The Securities and Exchange Board of India (SEBI) is the regulatory authority that oversees and regulates merchant banking activities in India. It formulates rules and regulations, licenses merchant bankers, and ensures compliance with disclosure norms. Additionally, the Reserve Bank of India (RBI) provides overall supervision and guidance to the banking sector, including merchant banks.
| 4. What are the key services provided by merchant banks in India? | |
Ans. Merchant banks in India offer a range of services, including underwriting of securities, managing public offerings, private placements, mergers and acquisitions advisory, debt restructuring, project financing, and corporate advisory services. They also play a crucial role in managing investment portfolios and providing wealth management services to their clients.
| 5. How does merchant banking contribute to the Indian economy? | |
Ans. Merchant banking plays a significant role in the Indian economy by facilitating capital formation, aiding in the efficient allocation of resources, and promoting economic growth. It helps companies raise funds for their expansion and development plans, which in turn leads to increased investment, job creation, and overall economic prosperity. Additionally, merchant banking activities contribute to the development of the capital market by ensuring fair and transparent transactions, enhancing investor confidence, and promoting market efficiency.
Text Transcript from Video
a merchant bank is a financial
institution that performs underwriting
loan services financial advising and
fundraising services to large
corporations and high net worth
individuals merchant banks do not
provide regular banking services such as
offering checking accounts to the
general public in fact merchant banks
don't take deposits a vast majority of
merchant banking activity involves
international transactions for instance
if ABC company were seeking to buy a
company in another country they would
hire a merchant bank to advise them on
the best way to structure the
transaction the merchant bank might also
help ABC by financing the transaction
through underwriting or some type of
syndicated loan arrangement merchant
banks are very much like investment
banks but because of their specialty in
international transactions their
emphasis is on providing services to
multinational corporations and high net
worth individuals that do business in
more than one nation
institution that performs underwriting
loan services financial advising and
fundraising services to large
corporations and high net worth
individuals merchant banks do not
provide regular banking services such as
offering checking accounts to the
general public in fact merchant banks
don't take deposits a vast majority of
merchant banking activity involves
international transactions for instance
if ABC company were seeking to buy a
company in another country they would
hire a merchant bank to advise them on
the best way to structure the
transaction the merchant bank might also
help ABC by financing the transaction
through underwriting or some type of
syndicated loan arrangement merchant
banks are very much like investment
banks but because of their specialty in
international transactions their
emphasis is on providing services to
multinational corporations and high net
worth individuals that do business in
more than one nation
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Dec 23, 2024 Last updated |
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