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A merchant banker is a financial intermediary that provides a range of services to corporations and government entities. These services typically include underwriting new debt and equity securities, facilitating mergers and acquisitions, offering advisory services for financial strategy, and managing investment portfolios. Unlike traditional banks, which primarily focus on accepting deposits and making loans, merchant bankers specialize in helping clients raise capital and navigate complex financial transactions. Their expertise is crucial for companies looking to grow, restructure, or optimize their financial operations.
Must be a body corporate, excluding NBFCs, unless specifically registered by the Reserve Bank of India for certain activities.
Must have adequate office space, equipment, and manpower to effectively conduct merchant banking activities.
At least two employees with experience in the merchant banking business are required.
Must meet the minimum capital adequacy requirements of Rs. 50 crore(for Category I Merchant Banker and Rs.10 crore for Category II Merchant Baker) at all times and/or amended from time to time by the Regulator.(Please check SEBI latest Merchant Banking Regulation for more information)
None of the applicant's key personnel should have been convicted of offences involving moral turpitude or economic crimes
The applicant has the professional qualification from an institution recognised by the Government in finance, law or business management
• Minium two key managerial personnel need to pass NISM-Series-IX.
• The designated Compliance Officer has to clear NISM Series III-A.
- Submit an application using Form A to the Securities and Exchange Board of India (SEBI).
- Include a non-refundable application fee as specified in Schedule II.
Select from one of the following merchant banker categories:
Category I: Full activities (issue management, advisory, underwriting, etc.).
Category II: Adviser, co-manager, underwriter.
Category III: Underwriter, adviser, consultant.
Category IV: Adviser or consultant only.
*Only Category I Merchant Banker can apply for license.
- Ensure the application is complete and conforms to the specified instructions.
- Incomplete applications will be rejected, but applicants may be given a chance to rectify issues.
Be ready to provide further information or clarification requested by the Board for proper assessment.
If required, the applicant or principal officer must appear before the Board for personal representation regarding the application.
The Board will evaluate the application based on the following criteria:
a. Corporate Status: Must be a body corporate, not an NBFC.
b. Infrastructure: Adequate office space, equipment, and manpower are necessary.
c. Experience: At least two experienced employees in merchant banking.
d. Capital Adequacy: Minimum net worth of five crore rupees.
e. Legal Standing: No significant litigation in the securities market.
f. Criminal Record: Key personnel must have no convictions for moral turpitude or economic crimes.
g. Professional Qualification: Relevant qualifications from recognized institutions.
h. Fit and Proper: Must be deemed a fit and proper person.
i. Investor Interest: Granting the certificate should be in the interest of investors.
If the applicant meets all eligibility requirements, the Board will grant a certificate of registration in Form B. The certificate remains valid unless suspended or cancelled.
Pay the applicable registration fee as specified in Schedule II upon receiving the certificate.
Comply with conditions of registration, including:
a. Change in Control: Obtain prior approval for changes in control.
b. Grievance Redressal: Address investor complaints within 21 days and report to the Board.
c. Capital Adequacy: Maintain required capital at all times.
d. Regulatory Compliance: Adhere to relevant regulations.
e. Reporting Changes: Notify the Board of any significant changes in submitted information.
- If the application is rejected, the applicant can appeal to the Board within 30 days for reconsideration.
- The Board will communicate its decision in writing.
Fee Requirement | Details |
Non-Refundable Application Fee | ₹50,000 payable along with the application for registration. |
Initial Registration Fee | ₹20 lakh at the time of grant of registration certificate. |
Ongoing Registration Fee | ₹9 lakh every three years from the sixth year of registration. |
Payment Timeline for Initial Fee | To be paid within 15 days of receiving intimation from the Board. |
Payment Timeline for Ongoing Fee | To be paid one month before the expiry of the block for which the fee has been paid. |
Payment Method | Fees to be paid by direct credit through online payment using the SEBI payment gateway. |
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