Merchant banks are banks which provide loans and venture capital to private enterprises in order to finance business endeavors. Unlike retail banks, merchant banks do not normally serve the banking needs of private individuals.
In addition to lending money to companies, merchant banks may also provide business consultation and information services, capital requirement assessment services, security underwriting services, and transfer agent services.
The term “merchant bank” is often used synonymously with the terms “acceptance house” and “investment bank”. In fact, the services provided by merchant banks are different to those provided by investment banks, although some investment banks offer merchant banking services and vice versa.