Zerodha applies for SEBI merchant banking licence to expand into investment banking

India's leading retail broker, Zerodha, is making a significant move into investment banking. The company has applied to Sebi for a merchant banking license through its arm, Zerodha Corporate Advisors. This strategic expansion comes as the equity capital markets show strong potential, with experts noting ample room for new players possessing robust distribution and investor networks.

If the licence is granted, Zerodha will be able to manage Initial Public Offerings (IPOs), advise companies on fund raising, and offer other merchant banking services.

Zerodha, one of India’s largest stock broking firms, has applied for a merchant banking licence from the Securities and Exchange Board of India (SEBI), signalling its entry into the investment banking space. The application was submitted on April 27 through Zerodha Corporate Advisors and is currently under review, according to SEBI’s latest update as of May 31.If approved, the Category-I merchant banking licence will allow Zerodha to expand beyond its core broking business into a wider range of capital market activities. These include managing initial public offerings (IPOs), follow-on public offerings (FPOs), rights issues, and other fundraising and advisory services.According to a report by Moneycontrol, a Zerodha spokesperson confirmed the development, stating that the company filed for the merchant banking (Category 1) licence with Sebi. Zerodha, Groww, Angel One, Upstox Get Nod For US Stock Investing Via GIFT City Zerodha is among 13 firms currently seeking merchant banking approvals as financial services companies increasingly look to tap into India’s growing primary capital market. Other applicants include Societe Generale Securities and InCred Capital.At present, there are 246 registered merchant bankers in India. The most recent approval was granted to Capri Global on June 5, reflecting continued expansion in the sector.Meanwhile, SEBI has been tightening the regulatory framework for merchant bankers. Earlier this year, it introduced significant changes aimed at improving capital adequacy, compliance standards, certification requirements, and overall operational discipline.The revised rules include updated net worth and liquid net worth requirements, along with a cap on total underwriting commitments set at 20 times a merchant banker’s liquid net worth. These norms will be implemented in phases for existing firms, with full compliance required by January 2, 2028.The regulatory overhaul is intended to strengthen financial resilience in the merchant banking industry while enhancing governance and protecting investor interests. Against this backdrop, Zerodha’s move signals its intent to diversify its financial services offerings and participate more directly in India’s fast-growing capital market ecosystem.

Beyond IPO management, merchant bankers play a central role in corporate finance advisory.

The licence will enable Zerodha to manage IPOs, advise companies on equity fundraising, and provide merchant banking and corporate advisory services