Regstreet Law Advisors SEBI has notified the SEBI (Merchant Bankers) (Amendment) Regulations, 2025, introducing one of the most significant restructuring exercises to the merchant banking framework in recent years. The amendments come into force 30 days from publication in the Official Gazette.
𝐊𝐞𝐲 𝐡𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬 𝐢𝐧𝐜𝐥𝐮𝐝𝐞:
A. 𝐑𝐞-𝐜𝐚𝐭𝐞𝐠𝐨𝐫𝐢𝐬𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐌𝐞𝐫𝐜𝐡𝐚𝐧𝐭 𝐁𝐚𝐧𝐤𝐞𝐫𝐬:
- Category I (all activities) and
- Category II (all except main-board IPOs); mandatory migration for existing registrants within prescribed timelines.
B. 𝐑𝐞𝐯𝐢𝐬𝐞𝐝 𝐜𝐚𝐩𝐢𝐭𝐚𝐥 𝐬𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬 𝐚𝐧𝐝 𝐢𝐧𝐭𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐨𝐟 𝐥𝐢𝐪𝐮𝐢𝐝 𝐧𝐞𝐭 𝐰𝐨𝐫𝐭𝐡 𝐫𝐞𝐪𝐮𝐢𝐫𝐞𝐦𝐞𝐧𝐭𝐬: o 𝘊𝘢𝘵𝘦𝘨𝘰𝘳𝘺 𝘐: Minimum Net worth ₹50 crore; liquid net worth ₹12.5 crore o 𝘊𝘢𝘵𝘦𝘨𝘰𝘳𝘺 𝘐𝘐: Minimum Net worth ₹10 crore; liquid net worth ₹2.5 crore
C. 𝐂𝐥𝐞𝐚𝐫 𝐬𝐞𝐠𝐫𝐞𝐠𝐚𝐭𝐢𝐨𝐧 𝐨𝐟 𝐜𝐨𝐫𝐞 𝐦𝐞𝐫𝐜𝐡𝐚𝐧𝐭 𝐛𝐚𝐧𝐤𝐢𝐧𝐠 𝐟𝐮𝐧𝐜𝐭𝐢𝐨𝐧𝐬: Due diligence, preparation of offer documents, and certain specified functions cannot be outsourced.
D. 𝐌𝐢𝐧𝐢𝐦𝐮𝐦 𝐫𝐞𝐯𝐞𝐧𝐮𝐞 𝐭𝐡𝐫𝐞𝐬𝐡𝐨𝐥𝐝: Merchant bankers must generate minimum revenue from permitted activities, subject to limited exceptions.
E. 𝐄𝐱𝐩𝐚𝐧𝐝𝐞𝐝 𝐬𝐮𝐢𝐭𝐞 𝐨𝐟 “𝐏𝐞𝐫𝐦𝐢𝐭𝐭𝐞𝐝 𝐀𝐜𝐭𝐢𝐯𝐢𝐭𝐢𝐞𝐬”: Covers public/rights issues, buy-back, delisting, open offers, valuation-linked fairness opinions, market making, private placements of listed/proposed securities, and international offerings.
F. 𝐒𝐭𝐫𝐞𝐧𝐠𝐭𝐡𝐞𝐧𝐞𝐝 𝐠𝐨𝐯𝐞𝐫𝐧𝐚𝐧𝐜𝐞 𝐬𝐭𝐚𝐧𝐝𝐚𝐫𝐝𝐬:
- Revised definition of principal officer with mandatory professional certifications for key personnel and the compliance officer;
- Mandatory independence of the compliance officer from the principal officer and transaction teams;
- Enhanced conflict-management rules, including prohibition on lead management of self-dealt issues or issues involving specified related shareholding thresholds.
The 2025 amendments consolidate SEBI’s policy direction towards higher institutional capacity, enhanced transparency in issue management, and ring-fencing merchant banking activities from cross-business risk.
𝐁𝐚𝐜𝐤𝐠𝐫𝐨𝐮𝐧𝐝 𝐨𝐧 𝐃𝐞𝐟𝐞𝐫𝐫𝐞𝐝 𝐑𝐞𝐬𝐭𝐫𝐢𝐜𝐭𝐢𝐨𝐧 𝐚𝐧𝐝 𝐑𝐞𝐯𝐢𝐬𝐞𝐝 𝐀𝐩𝐩𝐫𝐨𝐚𝐜𝐡
SEBI had earlier (Dec 2024) proposed restricting valuation and non-market activities with mandatory hive-offs, but deferred this in March 2025 after industry feedback. The final framework adopts calibrated ring-fencing through net-worth segregation, business-unit separation (instead of immediate corporate split), and time-bound alignment for valuation activities balancing oversight with business continuity.