Zerodha Gets SEBI Nod for Merchant Banking Licence, Registration Still Pending

Zerodha's application for a merchant banking licence has been cleared by the Securities and Exchange Board of India (SEBI). This was reported by Moneycontrol on 2 September 2026, quoting sources aware of the matter. The final registration with the regulator, however, has not come through yet. Once the registration is done, Zerodha will be allowed to manage IPOs, FPOs and rights issues.

The application was filed by Zerodha Corporate Advisors Pvt Ltd, a fully owned subsidiary of the group, on 27 April 2026. SEBI's own status update at the end of May 2026 showed the application as “under review”.

Key facts at a glance

What a Category I licence allows

A Category I merchant banking licence lets a firm advise companies on raising money, manage public issues and handle capital market transactions.

In simple terms, Zerodha Corporate Advisors will be able to:

• Work as a Book Running Lead Manager (BRLM) on a mainboard IPO
• Handle the DRHP and RHP process with SEBI and the exchanges
• Run the anchor investor book before the issue opens
• Take on underwriting responsibility for an issue

Category II merchant bankers sit one step below. They need ₹10 crore net worth, but they are not allowed to lead-manage mainboard equity IPOs. This mostly limits them to the SME segment.

Zerodha had confirmed the filing back in June, before the approval came. “We have filed application for the merchant banking (category 1) licence with Sebi,” the company told Business Standard in a report published on 28 June 2026. It added that the business plan would be worked out after the licence comes through. The company has not made any public statement on the approval so far.

Why the ₹50 crore capital rule matters

The approval has come at a time when the rulebook for merchant bankers has become much stricter.

Under the SEBI (Merchant Bankers) Amendment Regulations, 2025, the minimum net worth for a Category I merchant banker has gone up from ₹5 crore to ₹50 crore. Existing players have been given time – they need to reach ₹25 crore by January 2027 and ₹50 crore by January 2028.

Category I firms also have to keep at least ₹12.5 crore as liquid net worth, which means cash, fixed deposits, treasury bills or government securities. Underwriting is separately capped at 20 times the liquid net worth.

Here is the important part. The phased timeline is only for merchant bankers who are already registered. A new entrant clearing registration in 2026 walks in at the higher bar from day one. That is why this approval is a meaningful signal and not just a routine filing.

Source: SEBI (Merchant Bankers) Amendment Regulations, 2025.

Zerodha is not the only one in the queue

Zerodha is one of many applicants waiting in line. SEBI records showed around 13 applications pending as of the May 2026 update. Societe Generale Securities and InCred Capital are among the other names on that list.

The rush is easy to understand. Merchant banking fees depend on how many issues come to the market, and the primary market has stayed busy through 2026 in both the mainboard and SME segments. For a broker like Zerodha, whose main income comes from secondary market trading volumes, issue management is a different fee pool with a different cycle.

Our view: the real question is distribution, not capital

Zerodha already has a very large retail investor base. That is exactly the group issuers think about when they price a book. On paper, that is a strong card to play.

But lead-manager mandates depend on institutional relationships, and that is an area the firm has not worked in before. Capital is the easier problem to solve here. Relationships are not.

The first real test will be the day an issuer's DRHP cover page carries the name Zerodha Corporate Advisors next to the established investment banks. That is likely a few quarters away. Anyone tracking the mainboard IPOs open right now will not see the name on a syndicate list until the registration is formally granted.