Since the past two-three years, there has been an erosion in the number of merchant bankers, which has been steadily coming down from 802 during 1997-98 to 415 in 1998-99 and 186 in 1999-2000.

Recently, the membership of Ambi too has taken a beating. The number of members has come down to 65 from 125 as on March 31, 2000. Sources at the association, see this number coming down further to 40-30 in three years.

The change in the Sebi (Merchant Bankers) rules and regulations 1996, through which the regulator had abolished multiple categories of merchant bankers and disallowed them to carry out fund based activities other than those related exclusively to the capital market, could have also led to erosion, the report said.

However, a section of merchant bankers said, there is no possibility of further consolidation. The existing bankers would survive the heat because the category I merchant bankers are involved in multiple functions.

Besides handling issues, they are also involved in substantial acquisition of shares and takeovers, and buy back. So, if a merchant banker does not handle public issues that does not mean he has to close down his business, they said.

They also said that in coming days the market would witness many more strategic alliances or mergers. Valuation companies, who do not have the Sebi license to handle issues may look for strategic alliance like the one between Arthur Andersen and Ind Global Financial Trust Ltd.

While the number of issues handled in the year 2000 was 65, more than twice that of the previous year, the amount garnered was Rs 7,673 crore, which was lower by Rs 238 crore. This figure includes mobilisation of Rs 4,698 crore through nine debt issues by financial institutions.

Though no new instrument was launched, a new phenomenon observed during the year was that almost 97 per cent of all the issues handled did not keep an earliest closing date. Interestingly, of the 186 Sebi registered members, only 58 merchant bankers were involved in issues launched during the year.

However, 40 merchant bankers were designated as lead managers, up from 28 during the previous year.

About 22 merchant bankers, who did not act as lead managers in 1998-1999, did so during 1999-2000, while 10 merchant bankers, who were active in 1998-1999, did not lead manage a single issue during the period between 1999 and 2000, according to the statistics furnished in the report.