Zerodha is making a significant move by expanding into merchant banking after the Securities and Exchange Board of India (SEBI) approved its application. Sources report that the application was cleared, although formal registration with the regulator is still pending. This expansion marks a noteworthy shift as Zerodha transitions from its traditional broking business into more diverse capital market activities.

Application Submitted in April 2026

The application for merchant banking was officially filed by Zerodha Corporate Advisors on April 27, 2026. Upon completion of the registration process, the merchant banking licence will enable the company to engage in various capital market roles. These roles include managing initial public offerings (IPOs), follow-on public offers (FPOs), and rights issues, among other fundraising initiatives.

This diversification will allow Zerodha to compete directly with established Indian and global investment banks, thereby broadening its reach in the financial services sector. The entry into merchant banking represents a strategic move as the company seeks to expand its influence beyond its original core operations.

Zerodha’s Expansion in Financial Services

Over the last few years, Zerodha has strategically broadened its business portfolio within the financial services landscape. The company has ventured into asset management and lending via Zerodha Capital, while also investing through its proprietary fund. Recently, Zerodha also gained registration as a broker-dealer from the International Financial Services Centres Authority (IFSCA) in GIFT City.

The move gives it the capacity to facilitate international investments for Indian clients. With the anticipated entry into merchant banking, Zerodha is set to add a significant new business line at a time when companies actively seek funds from the primary market. This development may further position Zerodha as a key player in the Indian financial services arena.

Growth in India’s Merchant Banking Sector

The merchant banking sector in India has shown substantial interest from various fintech and financial services firms. As of August 31, Sebi reported that there are 248 registered merchant bankers. Additionally, there are ten merchant banking registration applications currently under review, including those from notable firms like Haitong Securities India and Houlihan Lokey Advisory India.

Zerodha’s entry comes at a time when Sebi has tightened its rules regarding merchant banking operations. The regulator has increased the minimum net-worth requirement for Category I merchant bankers from Rs 5 crore to Rs 50 crore, and for Category II merchant bankers, it has been set at Rs 10 crore. Category I merchant bankers are permitted to manage main-board public issues, while Category II entities are restricted from this activity.

The revised regulatory framework includes additional stipulations regarding liquid net worth and limits on aggregate underwriting obligations, setting them at 20 times the liquid net worth. Existing merchant bankers have been given a grace period to comply with the updated capital requirements, while new entrants, including Zerodha, will need to adhere to these regulations upon application.

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