Zerodha Eyes to Enter Investment Banking, Files for SEBI Merchant Banking Licence

Zerodha has applied for a Category I merchant banking licence from the Securities and Exchange Board of India (SEBI), as per news reports. The application was filed on 27 April and is currently under examination. 

What does the Licence Cover? 

A Category I merchant banking licence allows firms to provide a range of capital market services. These include managing initial public offerings (IPOs), follow-on public offers, and other share sale transactions. 

Merchant bankers are also permitted to act as book-running lead managers. Their role includes preparing and filing draft red herring prospectuses (DRHPs), conducting due diligence, helping determine issue pricing, and coordinating the overall public issue process. 

Advisory Business and Compliance 

Apart from equity offerings, merchant bankers advise companies on mergers and acquisitions, buybacks, open offers and other fundraising exercises.  

The business generates income mainly through advisory fees and transaction mandates rather than brokerage commissions. Large assignments can attract fees running into several crores. 

SEBI requires merchant bankers to meet minimum net worth criteria and maintain compliance, risk management and disclosure standards. They are also responsible for carrying out due diligence before bringing companies to the capital markets. 

Growing Interest in Merchant Banking 

As per the news reports, Zerodha's application comes at a time when more financial firms are seeking entry into merchant banking. As of the end of May 2026, 13 applications were awaiting approval from SEBI. 

The applicants include InCred Capital, Societe Generale Securities India, Neo Wealth Management, Stepone Capital Advisors and Haitong Securities India.  

Read More: DII Net Buying Slips to ₹6 Lakh on June 16 as FIIs Sell Shares Worth ₹749 Crore! 

Conclusion 

The application remains pending with SEBI. Once approved, Zerodha will be eligible to offer merchant banking services alongside its existing broking business, subject to regulatory requirements. 

For daily market updates and regular stock market news in Hindi, stay tuned to Angel One's share market news in Hindi. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.   
 
Mutual Fund Investments in the securities market are subject to market risks, read all the related documents carefully before investing.