Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025

8120 GI/2025 (1) REGD. No. D. L.-33004/99 xxxGIDHxxx xxxGIDExxx EXTRAORDINARY PART III—Section 4 PUBLISHED BY AUTHORITY

Securities and Exchange Board of India Mumbai, December 3, 2025

Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025

No. SEBI/LAD-NRO/GEN/2025/282.—In exercise of the powers conferred by Section 30 read with clause (b) of sub-section (2) of Section 11 of the Securities and Exchange Board of India Act, 1992 (15 of 1992), the Board hereby makes the following regulations to further amend the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, namely:-

1. These regulations may be called the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025.

2. These regulations shall come into force on the date of their publication in the Official Gazette.

No. 784] NEW DELHI, WEDNESDAY, DECEMBER 3, 2025/AGRAHAYANA 12, 1947 CG-MH-E-05122025-268275

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3. In the Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992, -

I. In Regulation 2, in sub-regulation (1), in place of clause (g), the following clause shall be inserted, namely:-

“(g) “Principal Officer” means the officer of the Merchant Banker (Banker) who has at least five years of experience in dealing in financial markets, and who has been assigned this responsibility by the Merchant Banker, and who is responsible at the level of the Merchant Banker for the management or conduct of the business relating to merchant banking and the other overall business of the Merchant Banker: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, shall comply with the requirements specified in this clause within such time and in such manner as may be specified by the Board;”

II. In place of the existing Regulation 3, the following Regulation shall be inserted, namely:-

“Application for Grant of Registration Certificate

3. (1) No person shall carry on business as or hold himself out as a Merchant Banker unless he has been granted a Registration Certificate by the Board under these regulations.

(2) Any application for the grant of a Registration Certificate by any person shall be submitted to the Board in Form-K.

(3) While submitting the application for registration under sub-regulation (2), the applicant shall pay the application fee specified in List-II (which shall not be refunded).

(4) The application under sub-regulation (2) shall be made for any one of the following categories of Merchant Bankers, namely:-

(a) Category-I (Category-I), which may carry out all merchant banking activities; (b) Category-II (Category-II), which may carry out all merchant banking activities, except those related to the issue (public offer) of equity shares to be listed on the Main Board of a recognized Stock Exchange: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, may re-opt for its category as Category-I (Category-I) or Category-II (Category-II) within such time period and in such manner as may be specified by the Board.”

III. In Regulation 6,

i. in place of the words “Merchant Bankers”, the words “Merchant Banker” shall appear;

ii. in place of the existing clause (a), the following clause shall be inserted (but there shall be no change in its proviso), namely:-

“(a) The applicant shall be a company (limited liability company / body corporate) [which is a company incorporated under the Companies Act, 2013 or any company or limited liability partnership firm incorporated under any previous law relating to companies], but it shall not be -

(i) a company incorporated outside India, although it may be a foreign bank licensed by the Reserve Bank of India,

(ii) a sole proprietorship (individual) under the Companies Act, 2013 (18 of 2013) as amended from time to time, and

(iii) a non-banking financial company (Non-Banking Financial Company / NBFC) under the Reserve Bank of India Act, 1934 (2 of 1934) as amended from time to time under Section 45-IA clause (c);”

iii. after the existing clause (b), the following clause shall be inserted, namely:-

“(ba) The officers referred to in clause (b) and the Compliance Officer shall hold such certificate(s) as specified by the Board;”

iv. the existing clause (c) shall be deleted;

v. in place of the existing clause (d), the following clause shall be inserted, namely:-

“(d) The applicant shall maintain such amount of money as required [including any requirements related to Capital Adequacy (Capital Adequacy) specified for the applicant], and shall also maintain such liquid assets as referred to in Regulation 7 and Regulation 7A;”

vi. in the existing clause (e), in place of the full stop “.”, the semicolon “;” shall appear;

vii. after the existing clause (e), the following clause shall be inserted, namely:-

“(f) If the applicant has any direct or indirect relationship with any person already registered with the Board under these regulations, then the conditions specified by the Board shall be fulfilled.

Explanation: For the purpose of this clause,

i. “Direct or indirect relationship” with any person shall be considered to exist when such person is an associate company, subsidiary, inter-connected company, or group company of the applicant [if the applicant is a company (body corporate)];

ii. If a Registration Certificate has already been granted to any other Merchant Banker, directly or indirectly, before the coming into force of the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025, it shall continue to remain valid.”

IV. In place of the existing Regulation 7, the following Regulation shall be inserted, namely:-

“Requirements related to Capital Adequacy

7. (1) The requirement related to money maintenance [Capital Adequacy (Capital Adequacy) referred to in clause (d) of Regulation 6] shall be maintained in the form of Net Worth -

(i) for Merchant Bankers of Category-I (Category-I), at least fifty crore rupees, and

(ii) for Merchant Bankers of Category-II (Category-II), at least ten crore rupees: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, shall comply with the requirement related to money maintenance [Capital Adequacy (Capital Adequacy)] within such time and in such manner as may be specified by the Board.

(2) If any Merchant Banker fails to maintain the minimum money referred to in sub-regulation (1), then he shall not undertake any other merchant banking activity until he complies with such requirement, although other action may be taken against him by the Board.

Explanation: For the purpose of this regulation,

(a) In the case of any company (limited liability company / body corporate), “Net Worth” shall have the meaning assigned to it under sub-section (57) of Section 2 of the Companies Act, 2013 (18 of 2013); and

(b) In the case of Limited Liability Partnership (LLP / Limited Liability Partnership), “Net Worth” shall mean the sum of the agreed capital (contribution) [as determined] by the partners (partners) and the amount of reserves and surplus.”

V. After the existing Regulation 7, the following new Regulation shall be inserted, namely:-

“Requirements related to Maintenance of Liquid Assets

7A. (1) The requirement related to maintenance of liquid assets [referred to in clause (d) of Regulation 6] shall be maintained in the form of Liquid Assets -

(i) for Merchant Bankers of Category-I (Category-I), at least twelve crore fifty lakh rupees, and

(ii) for Merchant Bankers of Category-II (Category-II), at least five crore fifty lakh rupees: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, shall comply with the requirement related to maintenance of liquid assets within such time and in such manner as may be specified by the Board.

(2) If any Merchant Banker fails to maintain the minimum liquid assets referred to in sub-regulation (1), then he shall not undertake any other merchant banking activity until he complies with such requirement, although other action may be taken against him by the Board.

Explanation: For the purpose of this regulation, “Liquid Assets” shall mean that portion of Net Worth which the Board may specify to be invested in such liquid assets into which money can be easily realized and on which there is no loan-liability, and “Liquid Assets” shall mean - low-risk assets into which money can be easily realized in a short time, such as cash in hand, fixed deposits, government securities (securities), money market instruments, call money, repos related to government securities, and marketable securities [including applicable haircuts].”

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VI. In Regulation 9A, in sub-regulation (1),

i. in place of the existing clause (d), the following clause shall be inserted, namely:-

“(d) It shall maintain such amount of money [fulfilling the requirement related to Capital Adequacy (Capital Adequacy)] as referred to in Regulation 7;”

ii. after clause (d), the following clause shall be inserted, namely:-

“(da) It shall maintain such liquid assets as referred to in Regulation 7A;”

iii. in clauses (c) and (f), in place of the full stop “.”, the semicolon “;” shall appear;

iv. after the existing clause (f), the following clauses shall be inserted, namely:-

“(g) It shall carry out only such activities as the Board may direct from time to time under these regulations;

(h) It shall not outsource its main merchant banking activities to any external person or agency, such as -

(i) activities related to due diligence;

(ii) activities related to preparation of the offer document; and

(iii) any other such activity as specified by the Board from time to time: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, shall comply with this clause within such time and in such manner as may be specified by the Board.

(i) It shall earn a minimum income as specified by the Board from merchant banking activities: Provided that the Registration Certificate granted to the Merchant Banker under these regulations shall not be cancelled unless it fails to meet the minimum income requirement specified by the Board from time to time;

(j) The officers referred to in clause (b) of Regulation 6 and the Compliance Officer shall hold such certificate(s) as specified by the Board: Provided that in the case of any Merchant Banker who has already been issued a Registration Certificate under these regulations, the officers referred to in clause (b) of Regulation 6 and the Compliance Officer shall obtain such certificate(s) within such time as specified by the Board.”

VII. After Regulation 9B, the following new Regulation shall be inserted, namely:-

“Minimum Income Requirement

9C. The Merchant Banker shall ensure that it earns a minimum income as specified by the Board from the activities referred to in sub-regulation (1) of Regulation 13C of these regulations: Provided that this regulation shall not apply to any Merchant Banker that only manages the business of issuing the following securities -

(i) Non-convertible securities, Debenture Instruments, Security Receipts, Municipal Debt Securities, Commercial Paper, which are listed or proposed to be listed; or

(ii) Units of Trust (Real Estate Investment Trust) or InvIT (Infrastructure Investment Trust), which are listed or proposed to be listed.”

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VIII. In Regulation 12, in place of the existing sub-regulation (2), the following sub-regulation shall be inserted, namely:-

“(2) If the Merchant Banker fails to pay the fee specified in sub-regulation (1), then he shall not carry out any new activity until he pays the fee amount, and in such case, the Merchant Banker shall also pay interest on the fee amount at the rate of 15% per annum for every month or part thereof of delay in paying the fee amount, although other action may be taken against him by the Board.”

IX. In place of the existing Regulation 13C, the following Regulation shall be inserted, namely:-

“Other Activities

13C. (1) The Merchant Banker who has been granted a Registration Certificate under these regulations may carry out any of the following activities related to the securities market [which fall within the regulatory purview of the Board], namely:-

i. activities related to management of public issues (public offerings), placement in listed institutions, and rights issues (rights offerings); and activities related to providing advisory or consulting services in this regard;

ii. activities related to the following:

a. activities related to acquisition (takeover) and takeover under the Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 [SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011];

b. activities related to buy-back under the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 [SEBI (Buy-back of Securities) Regulations, 2018];

c. activities related to delisting under the Securities and Exchange Board of India (Delisting of Equity Shares) Regulations, 2021 [SEBI (Delisting of Equity Shares) Regulations, 2021];

d. activities related to compliance with the requirements of the Securities and Exchange Board of India [Listing Obligations and Disclosure Requirements] Regulations, 2015 [SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015] regarding any scheme of arrangement (compromise);

e. activities related to implementation of scheme under the Securities and Exchange Board of India (Employee Stock Based Benefits) Regulations, 2021 [SEBI (Employee Stock Based Benefits) Regulations, 2021]; and

f. activities related to providing advisory or consulting services for the activities referred to in clauses (a) to (e);

iii. activities related to underwriting, as specified by the Board from time to time;

iv. activities related to private placement of securities listed or proposed to be listed on a recognized Stock Exchange;

Explanation: For the purpose of this clause, regarding “securities”, it shall be considered that “proposal to list them” means the date on which the issuer’s board resolution approving the listing of such securities on a recognized Stock Exchange with the Board is passed;

v. activities related to management if there is a proposal to issue securities to other parties; and activities related to providing advisory or consulting services in connection with such proposal;

vi. activities related to drafting the placement memorandum of any AIF (Alternative Investment Fund);

vii. activities related to providing due diligence reports;

viii. activities related to management of secondary market trading of listed securities on a recognized Stock Exchange;

ix. activities related to market making under the Securities and Exchange Board of India [Capital Formation (Issue) and Disclosure Requirements] Regulations, 2018; and

x. any other such activity as specified by the Board from time to time.

(2) The Merchant Banker -

i. may also carry out other activities given in the regulatory purview of the Board, by obtaining the relevant Registration Certificate in accordance with the relevant regulations of the Board; and/or

ii. may carry out activities given in the purview of any other financial sector regulator or any other authority [as specified by the Board], in accordance with the regulations or guidelines [if any] issued by that financial sector regulator or authority; and/or

iii. may carry out activities given in the purview of the Board or any other financial sector regulator, for which fees are charged, for which there is no fund liability, and which are related to the financial services sector,

but these activities shall be carried out by the Merchant Banker using a separate branch unit, and it shall also be ensured that there is no inter-linkage between the activities, and such shall be done in such manner and under such conditions as specified by the Board: Provided that any person who falls under the regulatory purview of the Reserve Bank of India and has already been granted a Registration Certificate under these regulations, shall carry out his activities mentioned in sub-regulation (1) using a separate branch unit: Provided further that any Merchant Banker who has already been granted a Registration Certificate under these regulations shall transfer his activities mentioned in this sub-regulation to a separate branch unit (branch units) within seven months from the date of coming into force of the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025 or within the time period specified by the Board.

Explanation: For the purpose of this sub-regulation, “financial sector regulator” means the authority or body established to regulate the services provided or transactions undertaken in the financial sector under any applicable statutory requirements, which includes - the Reserve Bank of India, the Insurance Regulatory and Development Authority, the Pension Fund Regulatory and Development Authority, the International Financial Services Centres Authority, the Ministry of Corporate Affairs, the Securities and Exchange Board of India, or any other authority as specified by the Board from time to time.

(3) The Merchant Banker shall ensure that the activities referred to in sub-regulation (2) do not have any adverse impact on the dual-net worth (net worth) specified for the Merchant Banker in these regulations.

(4) Any Merchant Banker who has a Registration Certificate from the relevant regulatory authority to carry out valuation-related activities shall complete such activity within ten months from the date of coming into force of the Securities and Exchange Board of India (Merchant Bankers) (Amendment) Regulations, 2025.”

X. In place of the existing Regulation 16, the following Regulation shall be inserted, namely:-

“Maintenance of Books of Accounts, Records and Other Documents

16. (1) The Merchant Banker shall maintain the books of accounts (ledgers) and other records and documents referred to in Regulation 14 for a minimum period of eight financial years.

(2) The Merchant Banker shall maintain all data and information in accordance with the standards specified by the Board from time to time regarding data storage and data localization (where data should be kept) within the borders of India.”

XI. In Regulation 21C, in the Explanation, in clause (i), in place of the words and full stops “any of them, directly or indirectly through its associate or holding company, controls at least fifteen percent voting rights in the other”, the words and full stops “any of them, either directly or indirectly [through its subsidiary (associate / subsidiary) or holding company] controls at least fifteen percent voting rights in the other” shall appear.

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XII. After the existing Regulation 21C, the following two Regulations shall be inserted, namely:-

“Merchant Banker shall not act as Lead Manager for Issues Promoted by Insiders

21D. The Merchant Banker shall not act as Lead Manager for issues promoted by insiders, nor shall it be involved in any other such activity related to issues promoted by insiders, which falls within the purview of any regulations made by the Board.

Merchant Banker shall not act as Lead Manager for Issues where Insiders Hold Shares

21E. The Merchant Banker shall not act as Lead Manager for any public issue if the shareholding of its directors, other key managerial personnel, Compliance Officer, officers [referred to in clause (b) of Regulation 6], or relatives of the aforementioned persons, individually or collectively, exceeds 0.1% of the paid-up share capital of the issuer or has a face value of more than 10,00,000 rupees (whichever is lower): Provided that if there is any shareholding in the issue for mutual funds and employee stock option schemes, it shall not be taken into account: Provided further that if the shareholding of the directors, other key managerial personnel, Compliance Officer, officers [referred to in clause (b) of Regulation 6], or relatives of the aforementioned persons, individually or collectively, exceeds 0.1% of the paid-up share capital of the issuer or has a face value of more than 10,00,000 rupees (whichever is lower), it shall only be allowed to act if it is only carrying out the activity of marketing the issue, but for this also, it shall provide all such information (disclosures) as the Board may require.

Explanation: For the purpose of this clause, ‘relatives’ of any person shall include -

(i) the spouse of the person or his/her spouse; (ii) the parents of the person and the parents of his/her spouse; (iii) the siblings of the person and the siblings of his/her spouse; (iv) the children of the person and the children of his/her spouse; (v) the spouse or spouse of the person referred to in sub-clause (iii); (vi) the spouse or spouse of the person referred to in sub-clause (iv); (vii) the Hindu Undivided Family (HUF) of the relevant person.”

XIII. In place of the existing Regulation 22, the following Regulation shall be inserted, namely:-

“Underwriting Obligations

22. The Merchant Banker shall carry out activities related to underwriting, as specified by the Board from time to time.”

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XIV. In Regulation 22B, in place of the existing sub-regulation (2), the following sub-regulation shall be inserted, namely:-

“(2) At any time, the total amount of underwriting done under all agreements shall not exceed twenty times the liquid assets (net worth) of the Merchant Banker: Provided that any Merchant Banker who has already been issued a Registration Certificate under these regulations, shall comply with the requirements specified in this sub-regulation within such time and in such manner as may be specified by the Board.”

XV. In Regulation 26,

i. in the heading, in place of the words “Prohibition on Acquisition of Shares”, the words and full stops “Prohibition on Purchase of Shares (Securities)” shall appear;

ii. in place of the words “No Merchant Banker or any of its partners or Principal Officer shall make any transaction in the securities of his accounts or his associates or relatives’ companies with customers or otherwise on the basis of unpublished price sensitive information acquired by him in the course of any professional duty”, the words, full stops, letters, and figures “No Merchant Banker or any of its directors, partners (partners) or managers (managers) or Principal Officer (Principal Officer) or Compliance Officer” shall appear;