SEBI clears Zerodha's merchant banking licence application
Zerodha's application for a merchant banking licence has been cleared by the Securities and Exchange Board of India (SEBI), according to sources familiar with the matter. The formal registration process with the regulator is yet to be completed, the sources said.
The application was filed by Zerodha Corporate Advisors on April 27, 2026. Moneycontrol had reported in June that the application was under process, and at that time Zerodha confirmed it had applied for the licence, saying it would share details of its business plans after receiving it.
Once registration is complete, the merchant banker licence would allow Zerodha to expand beyond its core broking business and participate in activities including managing initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other capital-market transactions. The move would mark Zerodha's entry into investment banking, bringing it into direct competition with established domestic and global investment banks.
Zerodha's expansion beyond broking
Zerodha 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, a registration that allows it to facilitate overseas investments for Indian investors.
The merchant banking entry could add another major business line as companies continue to look at the primary market to raise funds. The development comes as the merchant banking industry sees interest from financial technology and financial-services firms looking to tap India's growing primary capital market.
Regulatory landscape
As of August 31, 2026, SEBI had 248 registered merchant bankers. The regulator's application-status data also showed 10 merchant banking registration applications under process, including from Haitong Securities India, Houlihan Lokey Advisory India and Societe Generale Securities India, among others.
The approval for Zerodha comes amid a broader regulatory tightening of the merchant banking framework. SEBI has raised the minimum net-worth requirement for Category I merchant bankers to Rs 50 crore from Rs 5 crore, and set it at Rs 10 crore for Category II. Category I merchant bankers can manage main-board public issues, while Category II entities cannot. The revised framework also prescribes liquid net-worth requirements and caps aggregate underwriting obligations at 20 times liquid net worth. New applicants such as Zerodha will have to meet the applicable requirements.
The Indian IPO market saw a sharp slowdown in the first half of 2026 amid geopolitical tensions and market volatility, with activity rebounding strongly in July and August, with those two months accounting for nearly 69 percent of IPO capital raised so far this year, according to Moneycontrol.
Moneycontrol had written to Zerodha on August 28 seeking comments on the issue, but the company declined to comment.