Sebi Pushes Merchant Banker Deadline to December 31

The rules originate from the Sebi (Merchant Bankers) Regulations, 2025, notified on December 5. They revised net worth and liquid net worth thresholds and introduced a structure that requires investment banking, advisory and underwriting activity to sit in separate units. The intent is to reduce conflicts and improve transparency. Category I firms can lead-manage public issues; Category II firms can act only as co-managers or advisors.

Setting up an SBU involves legal restructuring, separate accounting and new compliance processes. For smaller merchant bankers, the cost and complexity are higher. The extension gives them roughly two extra quarters to build those systems. The net worth requirements are also substantial: liquid net worth must be held in cash or near-cash assets, making it a stricter test of financial strength than total net worth.

What the delay means for the IPO pipeline is less clear. Merchant bankers are the gatekeepers for public offerings. If compliance pressure had forced some firms to pause underwriting, the extension removes that near-term risk. The underlying burden remains, and firms still need to meet the new dates. Sebi did not indicate any further extensions. The next concrete marker is December 31 for the SBU transfer.