Zerodha's merchant banking license approved by SEBI: What's next?
What's the story
Indian stock brokerage firm Zerodha has received approval from the Securities and Exchange Board of India (SEBI) to enter the merchant banking sector. The application was submitted by Zerodha Corporate Advisors on April 27, 2026. However, the formal registration process with SEBI is still underway, as per Moneycontrol. Once completed, this license will allow Zerodha to manage initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other capital-market transactions.
Business diversification
Zerodha has been diversifying its financial services offerings
Zerodha has been expanding its financial services portfolio over the years.
The company has forayed into asset management and lending via Zerodha Capital, along with investments through its proprietary fund.
It also got registered with the International Financial Services Centres Authority (IFSCA) as a broker-dealer in GIFT City, enabling overseas investments for Indian investors.
Market interest
Pending applications for merchant banking registration
The merchant banking sector has witnessed a surge in interest from fintech and other financial services firms.
As of August 31, 2026, SEBI had registered 248 merchant bankers.
The regulator's application-status data also showed that 10 merchant banking registration applications are currently being processed.
These include those from Haitong Securities India, Houlihan Lokey Advisory India, and Societe Generale Securities India among others.
Regulatory changes
SEBI's new requirements for merchant bankers
Zerodha's entry comes as SEBI has tightened rules for merchant bankers.
The regulator raised minimum net-worth requirement for Category I merchant bankers to ₹50 crore from ₹5 crore, and set it at ₹10 crore for Category II.
The revised rules also include liquid net worth requirements and limit aggregate underwriting obligations to 20 times the liquid net worth.
Existing merchant bankers have been given time to meet these higher capital requirements while Zerodha will have to comply with applicable norms.