What are commercial banks?

Commercial banks are financial institutions that offer financial services, solutions and consulting to organizations. According to a notification from the Indian Ministry of Finance, a commercial banker in India is defined as ‘any person engaged in the business of emissions management, whether arranging in respect of the sale, purchase or subscription of securities as a manager, consultant, adviser in connection with such emissions management’. Therefore, a merchant banker provides consulting for his clients on financial, marketing, administrative and legal matters.

What is Mercantile Banking?

Unlike commercial banks that cater to the needs of the common man, while commercial banks cater to the needs of corporate businesses.

Merchant Bank is typically the provision of guidance and service to businesses for a fee, which can help an entrepreneur start a new business, raise capital, expand and modernize existing business, restructure a business, or help businesses register, buying and selling 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 evaluate it with financial institutions.

Debt and Equity Management offers: One of the main functions of a commercial banker in India is to help companies raise funds from investors. The main services offered are,

• Product design
• Prices
• Record of documents
• Support Guarantee
• Subsidy and reimbursement
• Manage the stock market listing

Problem management: These bankers play an important role in managing the issue which involves the marketing of corporate securities such as equity shares, preferred shares and bond offerings to the public.

Commercial banks act as intermediaries to help transfer capital from investors to their client. As per SEBI guidelines in India, a commercial banker in India arranges meetings between company representatives and agents to establish deals related to prospect registration, launch advertising campaigns and set board meetings to pass necessary resolutions. These bankers also consult companies on the pricing of emissions. Merchant bankers also provide Public Issuance Underwriting (not higher than 15%).

Customer portfolio management: Manage a wide range of securities, such as stocks, bonds issued by different companies to guarantee maximum return 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 assist their client’s management in various restructuring activities, such as mergers and acquisitions, divestitures, management buyouts, joint ventures, and more.

Financing abroad: Commercial bankers help their clients manage joint ventures, foreign currency investments, and foreign collaboration agreements.

Loan syndication: Commercial bankers help clients obtain term loans for projects, which can be obtained from a single development finance institution, a syndicate or a syndicate.

Advisory Services and Corporate Advisory: Corporate advice is a comprehensive package of all commercial banking services, such as project advice, restructuring, issue management, loan syndication, etc. Commercial bankers also offer their corporate clients customized solutions to financial difficulties along with attempts to refinance alternatives, evaluating cheaper sources of funds.

However, it should be noted that in order to act as a commercial banker in India or as a company, one must have the certificate required by SEBI, the securities and exchange board of India.

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