34 Merchant Banking & Financial Services-A.

JkR 3 Financial system Financial system is a system to canalize the funds from the surplus units to the d eficit units. It is a system for the efficient management and creation of financ e. Merchant Banking & Financial Services-A.JkR Limitations of the financial system in India Failed to meet the financial needs of small scale industries. The mushrooming of financial institutions has deteriorated the quality and effect iveness of the sector to some extent. It could not impose adequate control towards financial irregularities and frauds. Fails to create a well defined and organized capital market. It fails to motivate economically marginal or small entrepreneurs by providing mi cro credit to them. It is not flexible at the desired level. Registration with SEBI as Merchant Banker Without holding a certificate of registration granted by the Securities and Excha nge Board of India, no person can act as a merchant banker. Only a body corporate other than a non-banking financial company shall be eligibl e to get registration as merchant banker The categories for which registration may be granted Category I To carry on the activity of issue management and to act as adviser, consultant, manager, underwriter, portfolio manager. Capital Requirement Rs. 5 crores Category II To act as adviser, consultant, co-manager, underwriter, portfolio ma nager. Capital Requirement Rs. 50 Lakhs Category III To act as underwriter, advice or consultant to an issue. Capital Requirement Rs. 20 Lakhs Category IV To act only as adviser or consultant to an issue Capital Requirement - Nil MERCHANT Procedure for getting registration An application should be submitted to SEBI in Form A of the SEBI (Merchant Banker s) Regulations, 1992. SEBI shall consider the application and on being satisfied issue a certificate of registration in Form B of the SEBI (Merchant Bankers) Regulations, 1992. Rs. 5 lakhs which should be paid within 15 days of date of receipt of intimation regarding grant of certificate Validity and Renewal of Registration The validity period of certificate is Three years from the date of issue. Three months before the expiry period, an application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations, 1992. SEBI shall consider the application and on being satisfied renew certificate of r egistration for a further period of 3 years. Rs.2.5 lakhs which should be paid within 15 days of date of receipt of intimation regarding renewal of certificate. The validity period of certificate is Three years from the date of issue.

Three months before the expiry period, an application should be submitted to SEBI in Form A of the SEBI (Merchant Bankers) Regulations, 1992. SEBI shall consider the application and on being satisfied renew certificate of r egistration for a further period of 3 years. Rs.2.5 lakhs which should be paid within 15 days of date of receipt of intimation regarding renewal of certificate. SEBI SEBI is a body corporate with head office at Bombay. The Chairman and the board members are appointed by the Central government. SEBI has two major functions. They are : 1.Regulatory and 2.Development Regulatory Function REGISTERING THE BROKERS AND SUB-BROKERS REGISTRATION OF MUTUAL FUNDS REGULATION OF STOCK EXCHANGES PROHIBITION OF FRAUDULENT AND UNFAIR TRADE PRACTICE CONTROLLING INSIDER-TRADING, TAKE-OVER BIDS AND IMPOSING PENALTIES

Development Function Educating investors Training intermediaries in stock market transactions Promoting fair transaction\ Undertaking research and publishing useful information to all Objectives 1.To deal with development and regulation of stock market in India. 2.To promote fair dealings by the issue of securities and ensure a market place where they can raise funds. 3.To provide protection to the investors 4.Regulate and develop a code of conduct for brokers, merchant bankers, etc. 5.To have check on preferential allotment to promoters at a very low price. 6.To prevent deviations and violations of rules prescribed by stock exchange. 7.To verify listing requirements, listing procedures, and ensure compliance of t he same by the companies, so that only financially sound companies are listed 8.To prescribe required standards for merchant bankers. 9.The promote healthy growth of security market for the development of capital m arket in the country.