What are the recent developments and challenges in merchant banking?

Answer 1

2.3.5 Recent Developments in Merchant Banking and Challenges Ahead

The recent developments in Merchant banking are due to certain contributory factors in India.

They are.

1.The Merchant Banking was at its best during 1985-1992 being when there were many new issues. It is expected that 2010 that it is going to be party time for merchant banks, as many new issue are coming up

2.The foreign investors - both in the form of portfolio investment and through foreign direct investments are venturing in Indian Economy. It is increasing the scope of merchant bankers in many ways.

3.Disinvestment in the government sector in the country gives a big scope to the merchant banks to function as consultants.

4.New financial instruments are introduced in the market time and again. This basically provides more and more opportunity to the merchant banks.

5.The mergers and corporate restructuring along with MOU and MOA are giving immense opportunity to the merchant bankers for consultancy jobs

However the challenges faced by merchant bankers in India are

1.SEBI guideline has restricted their operations to Issue Management and Portfolio Management to some extent. So, the scope of work is limited.

2.In efficiency of the clients are often blamed on to the merchant banks, so they are into trouble without any fault of their own.

3.The net worth requirement is very high in categories I and II specially, so many professionally experienced person/ organizations cannot come into the picture.

4.Poor New issues market in India is drying up the business of the merchant bankers