Zerodha moves beyond broking, gets Sebi nod for merchant banking

The merchant banking sector has seen growing interest from fintech and other financial-services companies as India's primary capital market remains active.Zerodha’s proposed entry also comes at a time when Sebi has tightened the rules for merchant bankers.Zerodha is set to expand into a new area of the capital markets after its application to enter merchant banking was cleared by the Securities and Exchange Board of India (Sebi), according to sources familiar with the matter, reported Money control. However, the formal registration with the regulator is still in process.APPLICATION FILED IN APRILThe application was filed by Zerodha Corporate Advisors on April 27, 2026.Once the registration is completed, the merchant banking licence will allow Zerodha to take part in a range of capital-market activities. These include managing initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other fundraising transactions.The move will take Zerodha beyond its core broking business and bring it into direct competition with established Indian and global investment banks. ZERODHA EXPANDS BEYOND BROKINGZerodha has been steadily adding new businesses to its financial services portfolio over the past few years.The company has expanded into asset management and lending through Zerodha Capital, while also making investments through its proprietary fund. It has also received registration from the International Financial Services Centres Authority (IFSCA) as a broker-dealer in GIFT City, allowing it to facilitate overseas investments for Indian investors. Its entry into merchant banking could add another major business line as companies continue to look at the primary market to raise funds.248 MERCHANT BANKERS REGISTERED WITH SEBIThe merchant banking sector has seen growing interest from fintech and other financial-services companies as India’s primary capital market remains active.As of August 31, 2026, Sebi had 248 registered merchant bankers. The regulator’s application-status data also showed that 10 merchant banking registration applications were under process. These included applications from Haitong Securities India, Houlihan Lokey Advisory India and Societe Generale Securities India, among others.SEBI RAISES CAPITAL REQUIREMENT FOR MERCHANT BANKERSZerodha’s proposed entry also comes at a time when Sebi has tightened the rules for merchant bankers.The regulator has raised the minimum net-worth requirement for Category I merchant bankers to Rs 50 crore from Rs 5 crore. For Category II merchant bankers, the minimum requirement has been set at Rs 10 crore.Category I merchant bankers can manage main-board public issues, while Category II entities cannot.The revised rules also include requirements related to liquid net worth and limit aggregate underwriting obligations to 20 times the liquid net worth.While existing merchant bankers have been given time to meet the higher capital requirements, new applicants such as Zerodha will need to meet the applicable norms.- EndsPublished By: Jasmine anandPublished On: Sep 2, 2026 14:01 IST