By ipomarket.in Editorial Team · Last reviewed: 2026-09-03
Disclaimer: This article is for informational purposes only and does not constitute investment advice. IPO investments are subject to market risks. Please read the offer document carefully and consult a SEBI-registered investment advisor before investing.
Zerodha, India's second-largest broker, is moving deeper into the capital markets business. Its subsidiary, Zerodha Corporate Advisors Pvt. Ltd., has received approval from the Securities and Exchange Board of India (SEBI) for a merchant banking licence, according to the regulator's website. The approval date is reported as 1 September 2026, with formal registration still pending.
Before anything else, one clarification for retail investors: this is not a Zerodha IPO, and it is not a fundraising event. A merchant banking licence lets Zerodha manage IPOs, follow-on offers, and rights issues for other companies. It is a regulatory milestone that expands what Zerodha can do, not a share sale you can apply for.
What exactly happened
Zerodha Corporate Advisors filed its merchant banking application with SEBI on 27 April 2026. As per public reporting, that application has now received approval, though the entity is not yet a formally registered merchant banker. Bloomberg, citing SEBI's website, reported the approval, and it was first flagged by Moneycontrol citing sources familiar with the development. The Free Press Journal reported that the final registration process with the regulator is still pending.
So the current status is: approval granted, registration to be completed. The exact timeline for that final step has not been disclosed publicly.
The licence in question is reported to be a Category I merchant banking licence, which is the broadest category and allows a firm to act as a lead manager to public issues and handle the full range of issue management activities.
| Item | Detail |
|---|---|
| Entity | Zerodha Corporate Advisors Pvt. Ltd. |
| Application filed | 27 April 2026 |
| Approval reported | 1 September 2026 |
| Licence type | Category I merchant banking (reported) |
| Registration status | Formal registration pending |
What a merchant banking licence actually enables
Once Zerodha completes formal registration, the licence would let it participate in a range of capital-market fundraising activities, including:
- Managing initial public offerings (IPOs) as a lead manager or co-manager
- Handling follow-on public offers (FPOs) and rights issues
- Advising on other capital-raising transactions
Merchant bankers sit at the centre of the IPO process. They help a company draft its offer document, price the issue, market it to institutional and retail investors, and manage the mechanics of the listing. If you have ever read the front pages of a draft prospectus, the "book running lead managers" listed there are merchant bankers. For a refresher on how these documents work, see our guide on what a DRHP is and how to read it.
Why Zerodha is doing this
Zerodha built its name as a discount broker, but it has been steadily diversifying well beyond brokerage. Over the past few years the group has expanded into asset management, lending through Zerodha Capital, and proprietary fund investments. Zerodha Asset Management Company, a joint venture with fintech platform Smallcase, received SEBI's final approval to run a mutual fund business in August 2023. The group has also secured registration from IFSCA as a broker-dealer in GIFT City.
A merchant banking arm fits this pattern. Brokerage revenue is largely tied to trading volumes and is sensitive to regulatory changes and market cycles. Issue management is a different revenue stream, tied to companies raising capital rather than investors trading. For a firm that already touches millions of retail investors, moving into the sell side of the IPO business is a logical extension.
Zerodha was founded in 2010 by brothers Nithin and Nikhil Kamath. It has over 50 lakh clients and, by its own accounting, handles more than 15% of Indian retail trading volumes. That distribution reach could, in theory, be an advantage when marketing public issues, though how the firm plans to use it has not been detailed.
The market backdrop
Zerodha is entering a crowded field. As of 31 August 2026, SEBI had 248 registered merchant bankers. So this is not a first-mover play. What Zerodha brings is scale in retail distribution and brand recognition rather than a novel service.
The timing is worth noting. India was the world's second-largest primary equity issuance market in 2025, raising $21.6 billion through 352 deals as of 18 December 2025. But the first half of 2026 saw a slowdown, attributed to geopolitical uncertainty and volatile market conditions. Reports suggest a strong pipeline of IPOs is still expected, which is part of why new entrants see opportunity. If you want to track what is actually coming to market, our upcoming IPOs list for 2026 is updated as filings happen.
There is also a regulatory shift underway that new entrants must plan around. SEBI has proposed a phased rise in net worth requirements for merchant bankers. Firms managing public offerings will need a minimum net worth of ₹250 million before January 2027, rising to ₹500 million by January 2028. Any serious merchant banking operation will need to be capitalised accordingly.
What this means for retail investors
Be clear on what changes and what does not.
Nothing changes today for how you apply for IPOs. You still apply through your bank's ASBA facility or your broker's platform, and allotment still follows SEBI's rules. If you use Zerodha to invest, the process for applying to an IPO is unaffected by this licence.
Over time, you may see Zerodha's name on offer documents as a lead manager for issues it helps bring to market. That is the practical, long-term effect. It does not mean those issues are better or worse; the quality of an IPO depends on the company, its financials, valuation, and pricing, not on which banker manages it.
A note on conflicts and independence. When a broker also becomes a merchant banker, it can end up distributing IPOs it helped underwrite. That is standard across the industry, but it is a reason to keep your analysis independent of who is promoting an issue. We cover this tension in our piece on sponsored IPO content versus independent reviews.
The honest caveats
Several things are still unknown. Formal registration has not been completed, and no timeline has been made public. Zerodha has not announced any IPO mandates, revenue targets, or a detailed business plan for the merchant banking arm. Much of the early reporting was sourced to people familiar with the matter before the approval appeared on SEBI's website. Treat the operational specifics as open questions until the firm itself lays them out.
FAQ
Is this a Zerodha IPO I can invest in?
No. This is a merchant banking licence approval, not a share sale. There is no price band, no subscription window, and no way to apply. The licence lets Zerodha manage IPOs for other companies once it completes formal registration.
Has Zerodha's merchant banking licence been fully granted?
Approval has been reported, but formal registration with SEBI is still pending as of early September 2026. The firm cannot begin operating as a registered merchant banker until that final step is complete. The timeline for it has not been disclosed.
What is a Category I merchant banking licence?
It is the broadest category of merchant banking registration in India, allowing a firm to act as a lead manager to public issues and carry out the full range of issue management activities, including advising, pricing, and marketing an offer.
Does this affect how I apply for IPOs on Zerodha?
No. The IPO application process, allotment rules, and your account remain unchanged. This licence is about Zerodha's ability to manage issues for companies, not about the investor-facing platform.
Why is Zerodha expanding into merchant banking?
It diversifies revenue beyond brokerage, which is cyclical and volume-dependent. Zerodha has already moved into asset management, lending, and GIFT City operations, and issue management is a natural extension given its large retail investor base.
Last reviewed: 2026-09-03. Figures and status are based on media reporting and SEBI records available at the time of writing; formal registration was still pending. Verify the latest status on SEBI's official website before acting on any of this.