Specification of the consequential requirements with respect to Amendment of Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992
Summary
This circular outlines the phased implementation of revised capital adequacy and liquid net worth requirements for Merchant Bankers effective January 3, 2026. It defines 'liquid net worth' with specific haircuts for various asset classes and sets compliance timelines for underwriting obligations and employee certifications. Existing Merchant Bankers must re-categorize themselves by January 2, 2027, or face automatic downgrading or activity restrictions. This section mandates the independence of compliance officers and specifies experience requirements for principal officers. It prohibits merchant bankers from outsourcing core activities and establishes minimum revenue thresholds with associated cancellation penalties. Additionally, it outlines disclosure obligations for marketing-only roles and strict conditions for conducting non-SEBI regulated activities. Paragraph 11.3 mandates the Merchant Banker to submit an undertaking regarding compliance with regulation 13A and para 11.2 conditions in half-yearly reports. Paragraph 11.4 requires entities regulated by the Reserve Bank of India to conduct specified merchant banking activities through a separate business unit. The document con
Text
SEBI (Merchant Bankers) Amendment Regulations, 2025 shall be applicable w.e.f. January 03, 2026.
Applicants making applications on or after January 03, 2026 shall fulfill revised capital adequacy and new liquid net worth requirements as on date of application.
Existing Merchant Bankers shall comply with revised requirements in a phased manner as specified in para 2.2.
Revised capital adequacy and liquid net worth apply to existing MBs in phases: Phase I by Jan 02, 2027 and Phase II by Jan 02, 2028.
Existing MBs must intimate SEBI via email regarding their intended category from Jan 03, 2027, along with a CA-certified Net worth Certificate by Jan 02, 2027.
An existing MB failing to comply with Category I requirements by the end of Phase I or II shall be automatically designated as Category II MB.
An existing MB failing to comply with Category II requirements shall not undertake any fresh permitted activity under regulation 13A.
MB shall submit a CA certificate in the Half Yearly Report certifying maintenance of net worth and liquid net worth throughout the half-year period.
Liquid net worth means net worth deployed in unencumbered liquid assets with applicable haircuts: Cash/G-FDs 0%, Govt Securities/Mutual Funds 10%, Nifty 500 Listed Securities 30%.
Total underwriting obligations shall not exceed 20 times liquid net worth; existing MBs must comply by January 02, 2028.
MB must submit a CA certificate in the Half Yearly Report providing the value of total underwriting obligations and certifying compliance with regulation 22B(2).
Applicants must employ minimum two persons professionally qualified in finance, law, accountancy, or business management.
You have read the preview. Create a free account to read the full document and see every order that applied it.
Free accounts include 10 searches/day with full text access.
Source: SecMarx — Specification of the consequential requirements with respect to Amendment of Securities and Exchange Board of India (Merchant Bankers) Regulations, 1992. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.