Zerodha is preparing to enter a new segment of the capital markets after the Securities and Exchange Board of India (Sebi) cleared its application to begin merchant banking operations, according to sources cited by Moneycontrol. The formal registration with the regulator, however, is still underway.
APPLICATION SUBMITTED IN APRIL
Zerodha Corporate Advisors submitted the merchant banking application on April 27, 2026.
Once the registration is completed, the licence will allow Zerodha to undertake several capital-market activities, including managing initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other fundraising transactions.
The move will take Zerodha beyond its traditional broking business and place it in competition with established investment banks in India and overseas.
ZERODHA DIVERSIFIES BEYOND BROKING
Over the past few years, Zerodha has been expanding its presence across different areas of financial services.
The company has entered asset management and lending through Zerodha Capital and also makes investments through its proprietary fund. In addition, it has obtained a broker-dealer registration from the International Financial Services Centres Authority (IFSCA) in GIFT City, enabling it to facilitate overseas investments for Indian customers.
Its planned merchant banking business would add another significant vertical as companies increasingly turn to the primary capital market to raise funds.
248 MERCHANT BANKERS REGISTERED WITH SEBI
The merchant banking industry has attracted increasing interest from fintech firms and other financial-services companies as activity in India’s primary capital market remains strong.
As of August 31, 2026, Sebi had 248 registered merchant bankers. The regulator’s application-status data showed that 10 merchant banking applications were still being processed, including those from Haitong Securities India, Houlihan Lokey Advisory India and Societe Generale Securities India.
SEBI INCREASES CAPITAL REQUIREMENTS
Zerodha’s planned entry comes as Sebi has strengthened the regulatory requirements for merchant bankers.
The regulator has increased the minimum net-worth requirement for Category I merchant bankers to Rs 50 crore from the earlier Rs 5 crore. Category II merchant bankers must now maintain a minimum net worth of Rs 10 crore.
Category I merchant bankers are permitted to manage main-board public issues, while Category II entities do not have that authority.
The updated framework also contains provisions covering liquid net worth and caps total underwriting obligations at 20 times the liquid net worth.
Existing merchant bankers have been given time to comply with the increased capital requirements. New applicants such as Zerodha, however, will have to meet the applicable norms before obtaining registration.
