Zerodha Merchant Banking: What SEBI Approval Means
Zerodha has received approval from the Securities and Exchange Board of India (SEBI) to enter merchant banking, with its formal registration completed on September 1, 2026. The move will allow the company to participate in IPO management and other capital-market activities beyond its core broking business.
The application was filed by Zerodha Corporate Advisors on April 27, 2026. Zerodha had confirmed in June that it had applied for a merchant banking licence and would share details of its plans after receiving approval.
Zerodha merchant banking: what the approval enables
A merchant banking licence allows Zerodha to work on initial public offerings (IPOs), follow-on public offers (FPOs), rights issues and other capital-market transactions.
This marks Zerodha’s entry into investment banking and places it alongside established domestic and global investment banks operating in the segment.
Mohit Mehra, Whole-Time Director at Zerodha Corporate Advisors, said, “We've received the licence and will start operations over the next couple of months”.
He said the company would begin with equity capital markets, including IPOs, follow-on issues and related advisory.
How Zerodha plans to compete
Zerodha’s proposed approach is built around cost and distribution rather than hard-selling. Mehra said, “We intend to bring the same low-cost, no-hard-selling approach from the broking side over to issuers and investors”.
The company has expanded beyond broking into asset management, lending through Zerodha Capital and investments through its proprietary fund.
It has also obtained registration from the International Financial Services Centres Authority (IFSCA) as a broker-dealer in GIFT City, enabling it to facilitate overseas investments for Indian investors.
Why the timing matters for IPO activity
Zerodha’s entry comes as financial technology and financial-services firms show interest in merchant banking and India’s primary capital market.
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India’s IPO market slowed sharply in the first half of 2026 amid geopolitical tensions and market volatility, leading several companies to defer their listings.
Activity rebounded in July and August as sentiment improved. Those two months accounted for nearly 69 percent of IPO capital raised so far this year, according to the source.
The revival has been linked to expiring regulatory approvals, more realistic valuations and funding needs across infrastructure and manufacturing. Zerodha’s entry could add competition to a segment expected to remain active amid the pipeline of IPOs and other capital-raising transactions.
What SEBI’s revised net-worth rules mean
Zerodha’s proposed entry follows tighter SEBI requirements for merchant bankers. The regulator raised the minimum net worth for Category I merchant bankers to Rs 50 crore from Rs 5 crore and set the requirement for Category II entities at Rs 10 crore.
Category I entities can manage main-board public issues, while Category II entities cannot. The revised framework also includes liquid net-worth requirements and caps aggregate underwriting obligations at 20 times liquid net worth.
Existing merchant bankers are being given time to meet the higher capital norms. New applicants such as Zerodha, however, must meet the applicable requirements.
A larger merchant banking field
As of August 31, 2026, SEBI had 248 registered merchant bankers. The source said Zerodha would become the 249th merchant banker. SEBI’s application-status data separately showed 10 merchant banking registration applications under process, including applications from Haitong Securities India, Houlihan Lokey Advisory India and Societe Generale Securities India.
The immediate test for Zerodha will be whether its low-cost, no-hard-selling positioning can translate from broking into issuer advisory and equity-capital-markets transactions. Its first operations and mandate mix will show how far the model can extend beyond retail investing.
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