What are commercial banks?
Commercial banks are financial institutions that offer financial services, solutions and consultations to organizations. According to a notification from the Indian Ministry of Finance, a banking merchant in India is defined as “ Any person who is dedicated to the business of emissions management, either by entering into agreements related to the sale, purchase or subscription of the securities as administrator, consultant or advisor in relation to said emissions management ”. Therefore, a merchant banker offers his client advice on financial, marketing, administrative and legal matters.
What is commercial banking?
Unlike commercial banks, it caters to the needs of the common man, while commercial banks cater to the needs of corporate businesses.
Merchant Banking is typically the provision of guidance and service to corporations for a fee, which can help an entrepreneur start a new business, raise capital, expand and modernize the existing business, restructure a business, or help businesses register, buy and sell assets (stocks) on a stock exchange.
What are commercial banking services?
Projects management: Commercial bankers prepare project reports to analyze financing patterns to assess the cost of a project and appraise the project with financial institutions.
Debt and Wealth Management Offers: One of the main functions of a business banker in India is to help companies raise funds from investors. The main services offered are,
• Product design
• Prices
• Document registration
• Guarantee of support
• Assignment and reimbursement
• Manage listing on the stock market
Problem management: These bankers play an important role in managing the issue that involves the trading of corporate securities such as equity stocks, preferred stocks, and bond offerings to the public.
Commercial banks act as intermediaries to help transfer capital from investors to their clients. In accordance with SEBI guidelines in India, an Indian commercial banker organizes meetings between company representatives and agents to work out agreements related to prospect registration, advertising campaign launch, and board meetings to pass the necessary resolutions. These bankers also consult companies in setting prices for issues. Merchant bankers also provide Public Issuance Subscription (no more than 15%).
Client portfolio management: Manage a wide range of securities, such as stocks, bonds issued by different companies to guarantee maximum performance with minimum risk.
Placement and distribution: These bankers assist in the allocation and distribution of securities through the institutional and retail network of commercial banks.
Corporate restructuring: These bankers act as intermediary agents in the negotiations between the two companies and help their client’s management for various restructuring activities such as mergers and acquisitions, divestitures, company acquisitions, joint ventures, and more.
Off Shore Financing: Commercial bankers help their clients manage joint ventures, foreign currency investments, and foreign partnership agreements.
Loan syndication: Commercial bankers help clients obtain term loans for projects, which can be obtained from a single development finance institution, union, or consortium.
Advisory and corporate advisory services: Corporate advisory is a comprehensive package of all commercial banking services, such as project advisory, restructuring, issuance management, loan syndication, etc. Commercial bankers also offer their corporate clients personalized solutions to financial difficulties along with attempts to refinance alternatives, evaluating cheaper sources of funds.
However, it should be noted that to act as commercial bankers in India or as a company, one must have the certificate required by SEBI, the Securities and Exchange Board of India.