Zerodha Ventures into Investment Banking with Merchant Banking License Application

Zerodha's New Venture into Investment Banking

Zerodha, a prominent brokerage firm, has taken a significant step by submitting an application for a merchant banking license to the Securities and Exchange Board of India (SEBI). This move signifies the company's entry into the investment banking sector. If granted, the license will allow Zerodha to broaden its services beyond traditional brokerage to include merchant banking activities such as managing initial public offerings (IPOs), follow-on public offerings (FPOs), rights issues, and various other capital market transactions.

The application was filed through Zerodha Corporate Advisors Private Limited. A spokesperson for Zerodha stated, "We have submitted our application for the merchant banking (Category 1) license with SEBI. We will provide further details about our business strategies once we obtain the license." Currently, there are 246 merchant bankers operating in India, with the latest firm to receive a license being Capri Global on June 5.

The investment banking sector in India is experiencing a surge in activity, fueled by a robust pipeline of IPOs, follow-on offerings, and other capital market initiatives. Major players in this field include JM Financial, Kotak Mahindra Capital, Axis Capital, and ICICI Securities.

In 2021, Zerodha received preliminary approval to initiate its mutual fund operations, and in April 2026, it introduced fixed deposit (FD) investments on its Coin platform. Recently, SEBI announced important updates to the regulatory framework governing merchant bankers, enhancing capital adequacy, compliance, certification, and operational standards to bolster financial stability, governance, and investor protection within the merchant banking landscape. Additionally, SEBI has set new net worth and liquid net worth criteria for merchant bankers, which will be phased in for existing firms.