How many merchant bankers are there in India ? Why it is being called a "dying tribe" ?
There are approximately 160 merchant bankers registered with the Securities and Exchange Board of India (Sebi). Of these, 87 are members of AMBI. By no stretch of imagination is the tribe a dying one. Unfortunately, the status of the industry is being reckoned only by number of players. Even by these standards, the number of merchant bankers is probably more than those operating in other markets globally. Comparisons are being made with the numbers in years 1993-96. That was an exceptional period, and is not the ideal base to reckon with. Further, there is also an erroneous perception that only public issues constitute merchant banking. Several other products, such as mergers, private placements, GDRs and ADRs form part of their operations. Merchant bankers are synonymous with industry and capital.

Hence, while individual entities may exit and new ones appear, as in any other field, the investment banking business is virtually perpetual.

What are the prospects for this industry and when would you see "boom time" again ?
The prospects for the industry are tremendous and exciting. Several new financial products and ideas are in the pipeline. Boomtimes are not necessarily good always. A boom is invariably followed by an equally big trough and leaves everyone bewildered and depressed. In a mature market, the amplitude of the boom and trough should come closer and closer to the middle with a steady growth of the market. The prospects of the investment banking industry depends on several macro factors. Decisions taken on disinvestments by the Centre and global events would have impact on Indian industry and markets. The investment banking industry is a catalyst and has to work within the environment. At the micro level, the maturing of the retail investor would be a key factor. Even today, many investors regard equity investments as some sort of a loan and expect that their money would be returned. When reality hits them, they turn their ire towards the regulator.

And also, nowhere we have heard the promoter going poor. Always it is the investor who suffers loss. This is the paradox the market system has to address.

What are the steps required for improving the primary market scenario?
The most important of milestones in investment banking is the August 2000 guidelines. Sebi hit the nail on the head by compelling unestablished companies to go through the book-building route and garner 60 per cent of the issue from qualified institutional bodies (QIBs). Thus, only when informed institutions find a project viable, the retail investor is allowed in. The step represents institutionalisation of market in line with the global markets, where most of the investments are routed through investment bodies, almost eliminating individual players. Even so, it is necessary for the retail investor to educate himself. Sebi has constituted a committee to look into matters such as the format and contents of the offer document, to make it more meaningful to the lay investor. An educated and informed investor population is essential for a sound primary market too. It is the Primary Market that continuously rejuvenates the secondary market. The performance of the primary market should not be measured by thenumber of issues. I think the quality of the issues would be known only after a year or two of the issue.

Therefore, if you want to judge the issues which have come out today you should wait for another 1-2 years or have to judge on issues made two years ago. Today, the primary market in terms of number of issues may be good, how are these scrips doing two years down the line is more important.

Which of these areas - public issues, private placements of equity or debt would find favour of companies in the future?
The market for different products would vary from time to time. Normally, one finds that when one product is not in favour, the others are usually getting a good response. For instance, the private placement market today is said to be nearly ten times the IPO market. Six years ago, it was the other way round. The reasons could be that it is faster and cheaper. Further, the regulations for these are less. There are several ideas that are being discussed that could change the scenario dramatically. One hears of an "exchange" or a methodology to facilitate trading in unlisted securities.

This is certainly something novel.What are the specific problems that hinder growth of the industry - regulatory or otherwise?
Regulations are a part and parcel of life and the industry has to learn to live with them. However, if any regulation is found to be inconsistent with market dynamics, there are enough mechanisms available to get them changed.

In fact, as an industry representative, this is probably AMBI's most important function. The decisions taken on disinvestments, liberalisation etc. would have a great bearing on the fortunes of the industry.

What are your proposals to the finance ministry to be included in the next budget?
Merchant banking proposals form a very small part of the budget. When we make a proposal that has an impact on so many other areas. The budget is largely a fiscal exercise and hence the merchant banking would be benefited only indirectly. For example, any favourable change made in respect of dividend tax would boost the markets and benefit the industry.