11.
Explanation
The statement “Merchant bankers play a critical role in the overall Indian financial market” holds true, and their significance can be critically evaluated in the following ways:
1. Capital Raising: Merchant bankers are instrumental in helping companies raise capital through various means, such as IPOs, rights issues, and private placements. They assist in pricing the securities, structuring the offering, and ensuring compliance with regulatory requirements. This
aids in the growth and expansion of businesses in India.
2. Advisory Services: Merchant bankers provide valuable financial and strategic advice to companies. They assess the financial health, help in restructuring, and guide businesses on mergers and acquisitions. This expertise contributes to the efficient functioning of the financial
market.
3. Market Stabilization: Merchant bankers play a role in stabilizing the securities market by facilitating share buybacks and making market-making activities. These actions can prevent excessive volatility and promote investor confidence.
4. Regulatory Compliance: They are responsible for ensuring that companies adhere to various regulatory requirements, including disclosure norms and listing agreements. This helps in maintaining market integrity and investor protection.
5. Risk Management: Merchant bankers assess the risks associated with various financial transactions and help companies manage those risks effectively, which is crucial for the stability of the financial system.
6. Investor Relations: They assist companies in maintaining healthy relations with investors. This transparency and accountability improve investor trust and attract more investment into the market.
7. Innovation: Merchant bankers often introduce innovative financial products and structures, which can drive financial market development and diversification.
However, it’s important to note that while merchant bankers play a critical role, there can be concerns regarding conflicts of interest, insider trading, and unethical practices. Therefore, regulatory oversight and transparency in their operations are essential to ensure the integrity and efficiency of the Indian financial market.