Merchant Banking Services and depository services

Merchant banks are private financial institution or an organization which provides a number of services collectively with supervision of securities issues, portfolio management, hold of capital market institute, insurance, economic advices, project analysis, depository services etc. Here is a difference between a commercial bank and a merchant bank. The merchant banks mostly suggest financial services for a payment. While commercial banks agree to deposits and contribution of loans. The merchant banking does not act as repositories for investments of the persons.

  • Their main sources of earnings are PIPE (Private Investment in Public Entities) financings and worldwide trade.
  • Their derivative income sources are consulting, combine & help and financial market consideration.
  • Because they do not invest against security, they take extreme greater risks than traditional banks.
  • Because they are private, do not take money from the public and are international in scope.
  • Anyone considering dealing with any merchant bank should investigate the bank.
  • The reason that businesses should develop a working relationship with a merchant bank is that they have more money than project capitalists. Their advice tends to be more sensible.

Functions of Merchant Banking:-

  1.  Project promotion services.
  2.  Project business.
  3.  Administration and promotion of new issues.
  4.  Underwriting of fresh issues.
  5.  Organizing of credit.
  6.  Rental services.
  7.  Business recommended services.
  8.  Provide scheme capital.
  9.  Working mutual funds and off shore funds.
  10.  Savings supervision or portfolio management services.
  11.    Providing support for technical and financial collaborations.
  12.  Management of and production in commercial papers.

Depository Services:-

Depository Services is the investment securities both in certificated or uncertificated form. In the depository system, securities are held in accumulate accounts, which are like to holding funds in bank accounts. Rearrange of ownership of securities is done through simple account transfer.

Types of Depository Services: - 2 Types of Depository Services.

1-      NSDL (National Securities Depository Limited)

2-      CDSL (Central Depository Services Limited)

NSDL (National Securities Depository Limited): - This is the earliest central securities depository in India based in Mumbai. It is promoted by institutions of nationwide in charge for the financial development of India.

NSDL is promoted by NSE (National Stock Exchange), IDBI (Industrial Development Bank of India Limited), UTI (Unit Trust of India)

SBI, HDFC Bank, Axis Bank, OBC, Dena Bank, Canara Bank, Union Bank of India etc.

CDSL (Central Depository Services Limited): -This is the second Indian central securities depository based in Mumbai.

     CDSL is promoted by Bombay Stock Exchange (BSE), State Bank of          India (SBI), Bank of India, Bank of Baroda, HDFC Bank, Standard    Chartered Bank, and Union Bank of India.