The term Merchant Banking has its origin in the trading methods of countries in the late eighteenth and early nineteenth century when trade-taking place was financed by bill of exchange drawn by merchanting houses

Registration of Merchant Bankers with the SEBI is compulsory to carry out their activities. With effect from 9/12/1997 SEBI registers only category I merchant Bankers. A separate certificate of Registration from SEBI is required to carry on activities as portfolio managers.

1. Merchant Bankers should also be a body corporate other than non-banking financial company.

2. Merchant Bankers must have necessary infrastructure such as place, equipment and manpower to effectively discharge their activities.

3. Merchant Bankers must have employed at least 2 persons with experience to conduct merchant banking business.

4. Merchant Bankers should fulfill the capital adequacy requirement of minimum net worth (net worth means paid up capital and free Reserves) of Rs.5 crore.

5. Any person either directly or indirectly connected with the applicant that is an associate/subsidiary/interconnected/group company cannot have a Certificate of Registration from SEBI.

6. The merchant Bankers/their partners/their directors/principal officers should not be involved in any litigation connected with the securities market, which has an adverse effect on their business.

7. The merchant Bankers should have recognized professional qualification in Finance, Law or Business Management. Their Registration should be in the interest of the investors. The applicant must be a fit and proper person as per the criteria specified in the SEBI intermediaries Regulation 2008.

The Merchant Bankers have to pay to the SEBI the following fees:-

1. 
   Application fee of Rs. 25,000/-.
   
2. 
   Registration fee Rs. 10 lakh (registration is valid for 3 years from the date of registratrion).
   
3. 
   Renewal Rs. 5 Lakh.