Zerodha unit gets nod for merchant banking

Zerodha, a prominent Indian brokerage firm, has secured approval from the Securities and Exchange Board of India (SEBI) to venture into the investment banking sector with a Category-I merchant banking licence. This expansion will enable Zerodha to move beyond its conventional role of facilitating trades for investors to engaging in capital-raising advice for companies, thus opening up new avenues for growth amid evolving regulatory and competitive landscapes.

The application for this licence was submitted by Zerodha Corporate Advisors on April 27, 2026, according to ICICI Direct. The Category-I merchant banker registration would empower the company to engage in managing public issues and advising firms on capital-raising activities. At the time of the application, this strategic move was seen as part of Zerodha's broader diversification efforts beyond its core broking business.

Zerodha's merchant banking arm will primarily focus on equity capital markets, including Initial Public Offerings (IPOs) and subsequent offerings. IPOs involve private companies selling shares to the public for the first time, while follow-on issues and related advisory services will also be part of the expanded offering. This dual-role positioning of Zerodha offers a strategic advantage as it bridges the gap between investors and the equity market on both ends.

This development comes after a phase of diversification for Zerodha, which already encompasses asset management, lending, wealth-related services, and startup investing. Such expansion is a response to the shifting dynamics of the retail derivatives market and other regulatory measures, which have put pressure on parts of the traditional broking revenue model.

It is noteworthy that SEBI has tightened the criteria for new Category-I merchant bankers. As of January 2026, applicants must possess a minimum net worth of Rs 50 crore and a liquid net-worth of Rs 12.5 crore to qualify.