As provided in the SEBI (Merchant Bankers) Regulations, 1992, merchant banker is:
– Any person who is engaged in the business of issue management by making arrangements regarding selling, buying or subscribing to securities or
– or in relation to such issue management acting as manager, consultant, adviser or rendering corporate advisory
Categories of Merchant Bankers are:
| Category I | Category II | Category III | Category IV |
| Carry on any activity of the issue management including
– Preparation of prospectus and other information relating to the issue, – Determining financial structure, tie up of financiers and final allotment /refund and act as adviser/ consultant/ manager/ underwriter/ portfolio manager |
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A merchant banker may undertake the following activities:
1. Managing of Public Issue of Securities
2. Underwriting connected with the aforesaid Public Issue Management Business
3. Managing/advising on International Offerings of Debt/Equity i.e. GDR, ADR, bonds and other instruments
4. Private Placement of Securities
5. Primary or Satellite dealership of Government Securities
6. Corporate Advisory Services related to the Securities Market such as takeovers, acquisitions, disinvestment etc.
7. Stock-broking
8. Advisory services for projects
9. Syndication of rupee term loans
10. International Financial Advisory Services
The SEBI (Merchant Bankers) Regulations, 1992 has 44 regulations divided into 6 chapters and 3 schedules. These are:
CHAPTER I: PRELIMINARY
1. Short title and commencement
2. Definitions
CH2. APTER II: REGISTRATION OF MERCHANT BANKERS
1. Application for grant of registration certificate
2. Application to conform to the requirements/an opportunity to remove the objections
3. Furnishing of information, clarification and personal representation.
4. Consideration of application
6A. Criteria for fit and proper person
Capital adequacy requirement
Grant of registration certificate/Form B
Conditions of registration
Procedure where registration is not granted
12 Payment of fees and the consequences of failure to pay fee.
CHAPTER III: GENERAL OBLIGATIONS AND RESPONSIBILITIES
Code of conduct/Schedule III.13A. Merchant banker not to associate with any business other than that of the securities market
- Maintenance of books of account, records etc.
- Submission of half-yearly results
- Maintenance of books of account, records and other documents
- Report on steps taken on auditor’s report.
- Responsibility of the lead manager.
- Lead merchant banker not to associate with a merchant banker without registration.
21A. Merchant banker not to act for its associate.
Underwriting obligations.
22A. Agreement with clients
22B. General responsibilities of a merchant banker as an underwriter.
Acquisition of shares prohibited
Information to the Board
Disclosures to the Board
28A. Appointment of compliance officer
28B. Dispute Resolution.
28C. Grievance Redressal Mechanism
28D. Investor Charter
CHAPTER IV: PROCEDURE FOR INSPECTION
1. Board’s right to inspect
2. Notice before inspection
3. Obligations of merchant banker on inspection by the Board
4. Submission of report to the Board
5. Action on inspection or investigation report
6. Appointment of the auditor
CHAPTER V: PROCEDURE FOR ACTION IN CASE OF DEFAULT
- Liability for action in case of default
CHAPTER VI: POWER TO RELAX STRICT ENFORCEMENT OF THE REGULATIONS
- Exemption from enforcement of the regulations in special cases.
SCHEDULES
SCHEDULE I: Forms
Form A: Application for Grant of Certificate of Registration
Form B: Certificate of Registration
SCHEDULE II: Fees
SCHEDULE III: Code of Conduct for Merchant Bankers
References:
1. SEBI Website/www.sebi.gov.in
2. SEBI (Merchant Bankers) Regulations, 1992 amended upto 10th February, 2025.
3. Master Circular for Merchant Bankers Registered with SEBI dated 26th September, 2023.
Note:
- There are few regulations that were removed/omitted by issuing the relevant guidance/circular/regulation etc.
- Readers are advised to go through the original content of the regulations/master circular/references.
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