Zerodha Gets SEBI Nod for Merchant Banking, Expands Beyond Broking Business

Zerodha is preparing to enter the merchant banking business after the Securities and Exchange Board of India (SEBI) cleared its application, marking another major expansion beyond the company's core online broking operations.

The formal registration process is still underway, but the regulatory clearance could allow Zerodha to participate in several major capital market activities once its merchant banking licence is formally completed.

Zerodha Corporate Advisors filed its application for merchant banking registration on April 27, 2026.

The proposed merchant banking business would enable Zerodha to manage and advise on transactions including initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other fundraising activities in India's capital markets.

The move would bring Zerodha into a new segment of the financial services industry and place it in competition with established domestic and global investment banks operating in India's primary market.

Zerodha has steadily expanded its financial services portfolio in recent years. Apart from its well-known broking business, the company has entered areas such as asset management, lending through Zerodha Capital and proprietary investments.

The company has also received registration from the International Financial Services Centres Authority (IFSCA) as a broker-dealer in GIFT City, allowing it to facilitate overseas investment opportunities for Indian investors.

Merchant banking could now become another significant business vertical for Zerodha as Indian companies continue to use the capital markets for fundraising.

India's merchant banking sector has attracted increasing interest from fintech firms and other financial services companies amid continued activity in the country's primary capital market.

As of August 31, 2026, SEBI had 248 registered merchant bankers. Regulatory data also showed that 10 merchant banking registration applications were under process.

Several prominent financial institutions were among the applicants seeking registration, reflecting growing competition in India's investment banking and capital market advisory sector.

Zerodha's planned entry comes at a time when SEBI has introduced stricter regulations and higher capital requirements for merchant bankers.

The market regulator has increased the minimum net-worth requirement for Category I merchant bankers from Rs 5 crore to Rs 50 crore.

For Category II merchant bankers, the minimum net-worth requirement has been set at Rs 10 crore.

Category I merchant bankers are permitted to manage main-board public issues, including IPOs, while Category II merchant bankers do not have the same authority.

The revised SEBI framework also introduces requirements related to liquid net worth and places a cap on aggregate underwriting obligations at 20 times an entity's liquid net worth.

Existing merchant bankers have been provided time to comply with the revised capital requirements. However, new applicants entering the sector, including Zerodha, will be required to meet the applicable regulatory norms.

The expansion into merchant banking represents a significant step in Zerodha's evolution from a stock broking platform into a broader financial services company.

With India's IPO market and primary capital market continuing to attract companies seeking fundraising opportunities, the merchant banking business could provide Zerodha with access to an important new segment of the country's financial ecosystem.