The main business of the commercial bank is related to regular banking services, whereas merchant banks excel in providing consultancy and advisory services to the clients.
Loan extended by the commercial bank is debt-related.
Unlike equity related loans are granted by the merchant banks.
What do you mean by Merchant Bank?
A merchant bank is a financial institution that engages in underwriting and business loans, catering primarily to the needs of large enterprises and high net worth individuals. In the British market, the term merchant bank refers to an investment bank.
What are the types of merchant banking?
Merchant Banking Regulations:
- Category I Merchant Bankers: These merchant bankers can act as issue manager, advisor, consultant, underwriter and portfolio manager.
- Category II Merchant Bankers:
- Category III Merchant Bankers:
- Category IV Merchant Bankers:
How do merchant banks make money?
Making money: A commercial bank makes money by offering loans and earning interest. It also earns money by charging fees for checking accounts, ATM charges, charges on overdrafts, etc. On the other hand, a merchant bank makes money via fees they charge their big clients for providing financial services & consultation.
What merchant banks do?
A merchant bank is a company that conducts underwriting, loan services, financial advising, and fundraising services for large corporations and high net worth individuals. They do not provide regular banking services like checking accounts and do not take deposits.