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DIFFERENCE BETWEEN MERCHANT BANK AND COMMERCIAL BANK

Merchant Bank

Commercial Bank

Assist in raising capital in the form of equity, Provide funds in the form of term loan and preference shares and syndicated loan working capital. working capital instruments. Advisor not financer. Do not accept chequable deposits. Mainly fees based business. Financing is the main business. Demand deposits is the key feature. Mainly fund based business.

Being advisors, they are closer to the Being lenders, they are more cautious in customers and get to know risks of the assessing risks in lending proposal and transactions properly. They work on risk cannot afford to be grossly relationship based shields i.e. mitigation measures. and close with the customers. Most of the work they get is about Commercial banks majority business is of management of equity issues in the capacity terms lending and bank deposits. of lead manager, underwriter, piercing of issue, book running and liaisoning with SEBI. Example: SBI Capital Markets Ltd., ICICI Example: SBI, Union Bank of India, Canara Securities Ltd., PNB Investment Services Bank etc. Ltd. Etc.

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