Politics · India Bureau
Merchant bankers must maintain professional boundaries with clients: SAT
The chief of the Securities Appellate Tribunal has emphasised that merchant bankers must establish clear professional limits with clients while conducting thorough due diligence and operating strictly within legal parameters.
LSN India ·
Justice PS Dinesh Kumar, presiding over the Securities Appellate Tribunal, has stressed the importance of merchant bankers maintaining a clear line of demarcation in their dealings with clients, akin to the concept of Lakshman Rekha—a symbolic boundary that must not be crossed.
The SAT chief highlighted that merchant bankers are required to uphold professional distance in their relationships with clients. This separation is essential to ensure that advisory services remain objective and unbiased, protecting the interests of all stakeholders in financial transactions.
Justice Kumar underscored the significance of proper due diligence as a cornerstone of merchant banking operations. Financial intermediaries must thoroughly investigate and verify all relevant information before providing counsel or proceeding with transactions.
Crucially, merchant bankers must ensure that their guidance and recommendations remain firmly anchored within the established legal framework. This adherence to regulatory requirements protects clients from exposure to unlawful practices and upholds the integrity of capital markets.
The SAT chief's remarks come as regulators continue to emphasise stricter compliance standards for investment banking and merchant banking services in India, reinforcing accountability among financial intermediaries.