The Securities and Exchange Board of India (SEBI) has granted additional time to merchant bankers for complying with key regulatory requirements related to separate business units (SBUs), net worth and liquid net worth norms, citing operational challenges faced by the industry. According to reports from CNBC TV18, Business Standard and The Hindu BusinessLine, the market regulator issued a circular on Thursday stating the decision was taken after receiving representations from market participants highlighting difficulties in establishing the systems and processes required for implementing the SBU framework.
Under the revised timeline, merchant bankers will now have until December 31, 2026, to transfer activities to Separate Business Units under Regulation 13A(2) of the Merchant Bankers Regulations and comply with Clause 11.2.10 of the Merchant Bankers Circular. As reported by CNBC TV18, Business Standard and The Hindu BusinessLine, the earlier deadline was July 3, 2026. SEBI has also deferred the timelines for meeting enhanced net worth and liquid net worth requirements, with Phase I compliance now extended to March 31, 2027, from the earlier deadline of January 2, 2027, and Phase II compliance shifted to March 31, 2028, from January 2, 2028. The deadline for merchant bankers to intimate SEBI regarding their categorisation as Category I or Category II Merchant Banker has also been extended from January 2, 2027, to March 31, 2027.
Under the framework, merchant bankers managing public issues, fund raises and acting as lead managers will be required to maintain a minimum net worth of ₹25 crore by March 2027, which will increase to ₹50 crore by March 2028. According to CNBC TV18, merchant bankers engaged solely in advisory activities will need to maintain a net worth of ₹7.5 crore by March 2027, which will rise to ₹10 crore thereafter. SEBI has also mandated that merchant bankers maintain liquid net worth equivalent to at least 25% of the prescribed minimum net worth requirement at all times.
Industry participants had also sought alignment of compliance deadlines with the end of the financial year, as reported by CNBC TV18, Business Standard and The Hindu BusinessLine. The provisions stem from the SEBI (Merchant Bankers) Regulations, 2025, notified on December 5, 2025, which revised the net worth and liquid net worth requirements applicable to merchant bankers and introduced a framework for segregation of activities through SBUs. The revised schedule follows SEBI's broader regulatory overhaul aimed at strengthening risk management standards in India's rapidly expanding capital markets and initial public offering ecosystem.
