How to Get a Merchant Banker License in India?
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The Indian financial industry comprises various key players who facilitate crucial tasks like public offerings, strategic reorganization, mergers and acquisitions, etc. The financial professionals holding merchant banker licenses in India are specialized key players who support businesses and drive economic progress.
Comprehensive Overview of Merchant Banker License
A merchant banker license is an official authorization of SEBI which permits an entity to carry out merchant banking activities. The acquisition of a merchant banking license grants the authority to provide a range of financial services (like issue management, corporate advisory, and loan syndication) to the corporations.
Simply, a merchant banker license secures financial assistance for integrating trade and business in an international marketplace. Presently, there exist numerous merchant bankers operating to provide top-quality banking services at the highest of their abilities.
Insights into the Global Market of Merchant Banking Sector
The thriving merchant banking sector provides lucrative and rewarding services for those looking to expand their horizons. However, the global market size of merchant banking sector is valued at $ 42.1 billion in the year 2022. The projected growth of the merchant banking sector in the global market landscape is expected to reach around $232.2 billion by the end of 2032.
Categorization of Merchant Bankers in India
The merchant bankers in India are categorized based on the service scope. The following are the different types of merchant bankers in India:
Category I Merchant Banker
The category I merchant banker which require a minimum net worth of Rs. 5 crores are engaged in the activities associated with comprehensive risk management. The category I merchant bankers including issue managers, advisors, consultants, and underwriters ensures handling of issue management tasks.
Category II Merchant Banker
The category II merchant banker which requires a minimum net worth of Rs. 50 lakhs generally offer advisory, underwriting, and portfolio management services. These merchant bankers act as consultants, co-managers, and underwriters to ensure portfolio manager.
Category III Merchant Banker
The category III merchant banker which requires a minimum net worth of Rs. 20 lakhs are not authorized to undertake issue management or portfolio management. These bankers acts as either the underwriters or advisors and consultants.
Category IV Merchant Banker
The category IV merchant banker serves to function a advisors or consultants with no net worth requirement.
Benefits of Obtaining Merchant Banker License in India
The applicants applying for merchant banker license in India enjoy several key benefits as provided below:
The merchant banker license in India ensures the potential of profitability by providing services like advisory and underwriting.
2. Diverse Opportunities
The merchant banker license holders in India are offered to practice a wide range of projects and transactions which broadens the scope of work within the entity.
3. Client Relationships
The merchant banker license holders in India secures maintaining their client relationships and connections resulting to enhance their reputation and professional connections.
4. Entrepreneurial Opportunities
The Merchant banker license holders in India provide entrepreneurial opportunities assisting in the ownership of projects, initiatives, and the launch of their ventures within the entity.
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Eligibility Criteria for Obtaining a Merchant Banker License
The basic eligibility criteria required for obtaining a merchant banker license in India are as provided below:
Mandatory Documents for a Merchant Banking License
The applicants applying to obtain a merchant banker license in India must mandatorily furnish the following documents as provided below:
Process to Acquire a Merchant Banker License in India
The process required to acquire a merchant banker license in India is governed by the Securities Exchange Board of India. Consider the following steps required to acquire a merchant banker license in India:
Step 1: Filing of Form A
The first requires every applicant to file and submit the application form A to the Securities Exchange Board of India.
Step 2: Meeting Essential Requirements
The applicant must meet ad comply with all the essential requirements and documents specified for the successful obtaining of merchant banker license in India.
Step 3: Verification of Capital Requirements
Next, the Securities Exchange Board of India verifies whether the capital requirements are in consonance with the SEBI regulations.
Step 4: Payment of Non-Refundable Application Fees
After the successful verification of the capital requirements, the applicants are authorized for the payment of non-refundable application fees to register for their merchant banker license in India.
Step 5: Issuance of Certificate
Lastly, the Securities Exchange Board of India issues the certificate (license) in Form B for the successful registration of merchant banking firms in India.
Permitted Business Activities for Merchant Bankers
The merchant banker license holders, who play a crucial role in the securities market and corporate finance, perform permitted business activities, showing their versatility:
Conclusion
The grant of merchant banker licenses in India, which is facilitated by the Securities Exchange Board of India, is considered an integral player in driving economic progress. Further, the merchant bankers are licensed to secure the financial landscape, foster corporate growth, and facilitate capital market transactions in India. Individuals and entities looking to make a significant contribution to the financial sector are free to apply for merchant banker licenses in India.
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