Zerodha, the Bengaluru-based bootstrapped stock broking platform, has applied for a Category-I merchant banking licence with the Securities and Exchange Board of India (SEBI) as it aims to diversify its services beyond broking and wealth management. The application, submitted in April, is currently pending regulatory approval. A spokesperson for Zerodha confirmed the filing, stating, ‘We have filed an application for the merchant banking (Category 1) licence with SEBI. We’ll be able to share more about our business plans once we receive the licence.’If granted, the licence will enable Zerodha to manage initial public offerings (IPOs), provide capital-raising advisory services, and offer a range of other merchant banking services. This strategic move aligns with the current robust activity in India’s IPO market, where numerous startups and new-age companies are preparing to go public in the coming years. The potential approval of this licence could facilitate Zerodha’s ambition to establish a comprehensive capital markets business.Over the years, Zerodha has expanded its offerings from stock broking to include mutual funds, asset management, lending, startup investments through its Rainmatter initiative, and international investing. The addition of investment banking services would further enhance its footprint in the financial services ecosystem. However, this entry into the merchant banking space could also heighten competition, traditionally dominated by established players such as JM Financial, Kotak Mahindra Capital, Axis Capital, and ICICI Securities. With a growing number of venture-backed companies expected to pursue public listings, Zerodha could emerge as a significant player in this sector.While Zerodha has confirmed its application, it has not disclosed specific details regarding its future plans in investment banking. Recently, the company also introduced fixed deposits (FDs) on its Coin platform, allowing users to invest in FD schemes across partner banks and track their investments in one interface. In FY25, Zerodha reported a decline in revenue from operations and profits, amounting to Rs 8,847 crore and Rs 4,237 crore, respectively.
