Zerodha receives SEBI approval to enter investment banking

Licence scope and Zerodha’s plans

YourStory reports that the Category-I merchant banking licence permits Zerodha to manage public issues, advise companies on capital raising, and handle related advisory work. The company applied for the licence on April 27, 2026, through its entity Zerodha Corporate Advisors.

Zerodha is expected to initially focus on equity capital markets, including initial public offerings (IPOs) and follow-on public issues. This expansion positions Zerodha to operate on both sides of capital markets: executing trades for investors as a broker and advising companies on raising capital as a merchant banker.

Broader business diversification

According to YourStory, Zerodha’s entry into merchant banking follows a period of diversification beyond its core broking services. The company has expanded into asset management, lending, wealth-related services, and startup investing. This shift comes as the broking industry faces regulatory and competitive pressures, including changes in the retail derivatives market that have impacted traditional revenue streams.

The move adds a new growth avenue for Zerodha, aligning with its strategy to build a broader financial services ecosystem.

SEBI’s raised entry barriers

SEBI has increased the financial requirements for new Category-I merchant bankers, effective January 2026. New applicants must now demonstrate a minimum net worth of Rs 50 crore, up from the earlier Rs 5 crore threshold, along with a Rs 12.5 crore liquid net-worth requirement. This change aims to ensure higher financial stability among merchant banking players, according to the report.

What this means

Lazyfounder analysis — our interpretation, not reported fact.

Zerodha’s entry into investment banking reflects a strategic pivot for the company and a broader trend in India’s financial services sector. For founders and operators, this development signals increased competition in capital markets advisory, particularly in IPOs and follow-on issues. Existing merchant bankers may face new competitive pressure, while companies planning capital raises could benefit from additional service providers entering the market.

The move also highlights how regulatory changes are shaping industry dynamics. SEBI’s raised net worth requirement for merchant bankers raises the barrier to entry, favoring established players with deeper pockets. For startups or smaller firms eyeing this space, the higher capital requirement could limit opportunities or necessitate partnerships with larger entities.

Key takeaways

• Zerodha’s merchant banking licence introduces a new competitor in India’s capital markets advisory space.
• The expansion diversifies Zerodha’s revenue streams amid regulatory and competitive challenges in broking.
• Founders and companies planning IPOs or capital raises may now have Zerodha as an additional option for merchant banking services.
• SEBI’s raised net worth requirement for merchant bankers increases the barrier to entry for new players.