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

Functions

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  Issue management: Merchant Bankers advice their clients on the issuing of different types of shares such as equity shares, preference shares, and debentures, which are a type of debt instrument.
  
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  Credit Syndication: The Merchant Banks provide loans to a specific set of clients for setting up or executing various projects.
  
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  Portfolio Counselling: Merchant Banks also help their clients in investing and managing Portfolios, which are large investments consisting of a number of various financial instruments and investments.
  
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  Project Counselling: Clients are advised on various procedural and financial aspects of their short or long-term projects.
  
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  Brokering in Stock Exchange: Many Merchant Banks act as brokers of stock exchanges. They buy and sell shares of different types on behalf of their clients.
  
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  Advice on Expansion and Management: Some Merchant Banks also provide advice to their customers on the expansion and modernization of their businesses. They advise on mergers, acquisitions and takeovers too.
  
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  Services to Private & Public Sector Units: Merchant Bankers also offer many services to public & private sector units like helping in raising funds, marketing of securities, foreign collaborations and managing long-term finances.
  
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  Management of Interests and Dividends: Merchant Banks also help their clients in the management of interest on and dividends on their invested shares, and regarding the rate of dividend as well as their timing.
  
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  Leasing Services: Some Merchant Banks also help in leasing services where the lessor allows the use of specific assets to the lessee for a certain period on behalf of rentals or fees.