Home / Business and Economy / Sebi Overhauls Merchant Banker Rules
Sebi Overhauls Merchant Banker Rules
8 Dec
Summary
- Merchant bankers now face capital adequacy and minimum revenue requirements.
- Sebi permits merchant bankers to conduct non-core activities under certain conditions.
- New categorization introduces net worth tiers for merchant bankers.
The Securities and Exchange Board of India (Sebi) has implemented a comprehensive overhaul of merchant banker regulations, establishing a new capital adequacy framework. These revised rules introduce stringent requirements for liquid net worth and mandate minimum revenue generation from permitted activities, enhancing financial stability and risk management for these entities.
In a significant shift, Sebi now permits merchant bankers to undertake activities falling outside their primary regulatory scope, subject to adherence to specific conditions. These additional activities must be fee-based, non-fund based, and pertain to the financial services sector, allowing for greater business diversification.
The updated framework also introduces a tiered categorization for merchant bankers based on their net worth. Category 1 bankers require a net worth of Rs 50 crore, while Category 2 need Rs 10 crore, with varying permissions for undertaking specific financial activities.
