Merchant banks in Sebi squeeze as new rules kick in

and head of equity capital markets at Equirus Capital.

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Sebi has put in place minimum revenue requirement, a first for the merchant banking industry. BLOOMBERG

“Given the amount of business and the nature being cyclical, having too many bankers may not be viable.”Sebi has also introduced a minimum revenue mandate, a first for the industry. Category I merchant bankers will need to generate at least ₹25 crore and Category II firms ₹5 crore from permitted activities over a rolling three-year period. While enforcement will begin only in April 2029, failure to meet the threshold could lead to cancellation of registration, barring exceptional circumstances such as pandemics or global recessions.

To meet the revenue and net worth criteria, merchant bankers will need to participate in issuances. Capital market issuances form the core of merchant banking revenues.