Zerodha Enters Investment Banking: SEBI Clears Merchant Banking 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, however, is yet to be completed, the sources said.

The application was submitted by Zerodha Corporate Advisors on April 27, 2026. Moneycontrol had first reported in June that the application was being processed by SEBI. At the time, Zerodha confirmed that it had applied for the licence and said it would disclose its business plans after securing regulatory approval.

Zerodha Eyes Investment Banking

A merchant banking licence would allow Zerodha to expand into investment banking and capital-market transactions, including managing initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other fundraising activities.

The move would take Zerodha beyond its established broking business and bring it into competition with both domestic and international investment banks.

The application comes as interest in merchant banking grows among fintech and financial-services companies seeking to participate in India’s expanding primary capital market.

Expanding Beyond Broking

Zerodha has been steadily broadening its financial-services footprint in recent years. Besides its core broking operations, the company has moved into asset management, lending through Zerodha Capital and proprietary investments.

It has also secured 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.

A merchant banking licence would add another significant business vertical to that portfolio, potentially positioning Zerodha to participate directly in the growing pipeline of equity fundraising and public-market transactions.

As of August 31, 2026, SEBI had 248 registered merchant bankers. The regulator’s application-status data separately showed 10 merchant banking registration applications under process, including those from Haitong Securities India, Houlihan Lokey Advisory India and Societe Generale Securities India.

IPO Market Stages Strong Comeback

Zerodha’s proposed entry comes as India’s primary market recovers from a weak first half of 2026. Geopolitical tensions and market volatility had led several companies to defer their IPO plans.

Activity picked up sharply in July and August, which together accounted for nearly 69% of the IPO capital raised so far this year.

The revival has been attributed to improving investor sentiment, more realistic valuations, expiring regulatory approvals and strong funding requirements in sectors such as infrastructure and manufacturing.

SEBI Raises Capital Requirements

The proposed entry also follows SEBI’s tightening of the regulatory framework governing merchant bankers.

The regulator has raised the minimum net worth requirement for Category I merchant bankers to ₹50 crore from ₹5 crore, while Category II entities must maintain a minimum net worth of ₹10 crore.

Category I merchant bankers can manage main-board public issues, whereas Category II entities cannot.

The revised framework also introduces liquid net-worth requirements and caps aggregate underwriting obligations at 20 times liquid net worth. While existing merchant bankers are being given time to comply with the higher capital requirements, new applicants such as Zerodha will have to meet the applicable norms.

If the registration process is completed, Zerodha’s entry could add another major competitor to a merchant banking segment that is expected to remain active as India’s IPO and capital-raising pipeline expands.