Zerodha gets Sebi nod for merchant banking licence, formal registration awaited: Report

Zerodha’s application for a merchant banking licence has been cleared by market regulator Sebi, paving the way for the discount broker to enter investment banking as it expands beyond its core broking business, according to reports. The formal registration process is yet to be completed. Once the registration is in place, Zerodha will be able to offer merchant banking services.

The move marks another step in Zerodha’s attempt to build a wider financial services platform. Over the past few years, the Bengaluru-based company has expanded from stockbroking into asset management, lending and private investments.

Zerodha Corporate Advisors had filed its application with Sebi in April this year, according to reports citing regulatory records.


A merchant banking licence will give Zerodha a presence in India’s primary market at a time when IPO activity has picked up sharply. The firm already has a large retail investor base through its broking platform, but investment banking will place it on the issuer side of the market, where merchant bankers help companies raise capital and manage public issues.

Zerodha is one of India’s largest broking platforms, with more than 1.6 crore customers. Its customers place billions of orders every year through its trading platform.

The licence will also deepen Zerodha’s role across the capital markets chain. Its main business remains broking, but the company has been adding related businesses that serve investors, borrowers and companies.

Zerodha already runs Zerodha Fund House, its asset management venture, and has been building a passive and low-cost investment product stack.

The company has also expanded through Zerodha Capital, its loan-against-securities business. Nithin Kamath said earlier this year that the LAS business had crossed Rs 500 crore, describing it as a secured product meant to help customers borrow against shares and mutual funds rather than depend on high-interest personal loans or credit card debt.

Zerodha Capital allows customers to borrow against shares and mutual funds pledged from their demat accounts. The company has said it is working to make the loan-against-securities process available online for non-Zerodha demat accounts as well.

In a recent business update, Kamath said Zerodha’s core holdings within its investment portfolio include Zerodha Capital, Zerodha AMC and Ditto. He also said the company was preparing to launch US investing and mutual fund transactions on Kite.