Merchant banking is an important service provided by a number of financial institutions that help in the growth of the corporate sector which ultimately leads to the overall economic development of the country. Merchant banker means a financial institution that accepts funds from the investors and provides these funds to the borrowers. They also provide consultancy services to their clients which helps the businessman to start a new business, to raise finance from capital market and helps in merger and acquisition of business. Merchant banks were expected to perform several functions like underwriting, loan syndication, portfolio management, consultant, advisor and host of other activities. This study helps to understand the concept of merchant banking and the recent developments in merchant banking.