The Securities and Exchange Board of India (SEBI) has granted additional time to merchant bankers for complying with key regulatory requirements related to separate business units (SBUs), net worth and liquid net worth norms, citing operational challenges faced by the industry.
In a circular issued on Thursday, the market regulator said the decision was taken after receiving representations from market participants highlighting difficulties in establishing the systems and processes required for implementing the SBU framework. Industry participants had also sought alignment of compliance deadlines with the end of the financial year.
Under the revised timeline, merchant bankers will now have until December 31, 2026, to transfer activities to Separate Business Units under Regulation 13A(2) of the Merchant Bankers Regulations and comply with Clause 11.2.10 of the Merchant Bankers Circular. The earlier deadline was July 3, 2026.
SEBI has also deferred the timelines for meeting enhanced net worth and liquid net worth requirements.
For Phase I, compliance with net worth requirements under Regulation 7 has been extended to March 31, 2027, from the earlier deadline of January 2, 2027. Similarly, Phase II compliance has been shifted to March 31, 2028, from January 2, 2028.
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The same extensions have been granted for liquid net worth requirements under Regulation 7A. Merchant bankers will now have until March 31, 2027, and March 31, 2028, respectively, to meet the Phase I and Phase II requirements.
The deadline for informing SEBI about categorisation as Category I or Category II Merchant Banker has also been extended from January 2, 2027, to March 31, 2027.
The revised schedule follows SEBI's broader regulatory overhaul announced in December and detailed further in January, aimed at strengthening risk management standards in India's rapidly expanding capital markets and initial public offering ecosystem.
Under the framework, merchant bankers managing public issues, fund raises and acting as lead managers will be required to maintain a minimum net worth of Rs 25 crore by March 2027. This requirement will increase to Rs 50 crore by March 2028.
Merchant bankers engaged solely in advisory activities will need to maintain a net worth of Rs 7.5 crore by March 2027, which will rise to Rs 10 crore thereafter.
SEBI has also mandated that merchant bankers maintain liquid net worth equivalent to at least 25% of the prescribed minimum net worth requirement at all times.
Liquid net worth refers to funds held in cash or cash-equivalent instruments that can be readily converted into cash.
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