Home | ARTS | Definition of Portfolio Managers

Merchant Banking and Financial Services, III Semester (MBA), UNIT-2

Definition of Portfolio Managers

   Posted On :  07.10.2021 07:48 am

Definition Portfolio means the total holdings of securities of a person. Portfolio managers are persons who in pursuance of a contract/arrangement with client, advise/direct/ undertake on behalf of the client by the discretionary portfolio manager or otherwise, the management/administration of portfolio of securities/funds of clients.

Discretionary portfolio management allows the exercise of discretion with regard to investment/Management of the portfolio of the security/funds. Non-Discretionary portfolio manager acts in accordance with the directions of the client.

Registration

A certificate of Registration from SEBI is mandatory to act as portfolio manager.

Certificate of Registration is valid for 3 years.

The application fee for registration is ` 1,00,000/-

Registration fee is ` 10,00,000/- Renewal Fee is ` 5,00,000/-

Renewal is also valid for 3 years.

Registration Procedure

The SEBI takes into account the following matters while considering the application:-

Matters relevant to portfolio management activities

Employment of two persons experienced in portfolio management, stock broking, investment management.

Persons connected with the applicant should not have been refused registration.

Capital adequacy requirement of not less than net worth of ` 2 crore.

The applicant/partner/director/principal officer should not have been convicted for any offence involving moral turpitude/guilty of any economic offence. The applicant should not have been involved in any litigation connected with the securities market.

The principal officer of the applicant to have professional qualification in finance/law/accounting/business management or at least 10 years experience in related activities in the securities market.

The issue of certificate should be in the interest of investors.

The applicant should be a body corporate

There should not have been any disciplinary action taken by SEBI against any person directly or indirectly connected with the applicant.

The applicant must be a fit and proper person as per the criteria specified in the SEBI Intermediaries Regulation 2008.

The Future

For the merchant banking division, the development of new services to meet the changing market conditions is an ongoing process. Today the entire merchant banking industry in India is faced with the challenge of attracting Non Resident Indian (NRI) investment into India, particularly under the scheme for portfolio investments through stock exchange. The Merchant Banking Division is the process of introducing a comprehensive portfolio advisory service which will try to fill up the information gap, offer expert counseling on investment opportunities, undertake to buy/ sell orders, periodically evaluate the portfolio and look after all the administrative formalities such as attending to tax returns, collections and remittances of dividends etc., in compliance with the Reserve Bank of India and SEBI guidelines.

Conclusion

Merchant banking essentially involves selling an issue for a company and handling related work. In the wake of liberalization of the financial sector, we are witnessing certain merchant banking prospects emerging be it an Indian company or foreign or a multinational, playing in the primary and secondary markets competitively. The mushroom growth of merchant banks has given rise to unethical means to sell shares. For a healthy growth of the market operation, the SEBI should enforce strict control on merchant banks and remove the weeds of manipulation and corruption in the market. Stipulation of proper checks and regulation will raise the confidence of investing public in the dynamic and vibrant market mechanism which will be in the larger interests of the society as well as of the economy.

The growth of the capital market in India in the 90s is mainly due to the key role played by the merchant banking divisions of leading development banks as well as commercial banks. In a way, the merchant banks have come to occupy an important place in the Indian financial scene with seven of the top ten merchant banking coming from the development banks and other financial institutions. They dominate the market in providing professional service to the corporate sector. The future growth of the capital market depends, to a large extent on the financial services made available by them.

In fact, merchant banks should replace brokers in trading, in course of time, so that the market operations will be beneficial both to the industrial sector and investors as well as other operators in the primary and secondary markets. And the merchant bankers should also pass on the profits to investors, depositors and shareholders equitably. By its unique features, it is playing key role in accelerating the economic growth.
Tags : Merchant Banking and Financial Services, III Semester (MBA), UNIT-2
Last 30 days 104 views

OTHER SUGEST TOPIC