SEBI Gets Phased Capital, Revenue and Compliance Timelines for Merchant Bankers

Current Context: Effective January 3, 2026, SEBI has overhauled the Merchant Banker Regulations to enhance financial resilience and accountability. 

The key updates are:

• Phased Capital Hike: Existing Category I merchant bankers must increase their net worth to ₹25 crore by 2027 and ₹50 crore by 2028.
• New Liquidity Norms: Firms must maintain a "Liquid Net Worth" (cash or near-cash assets) equal to 25% of their total required net worth.
• Revenue Thresholds: To prevent license hoarding, Category I firms must generate at least ₹25 crore in cumulative revenue over three years (first assessment in 2029).
• Underwriting Cap: Total underwriting obligations are now strictly capped at 20 times the firm’s Liquid Net Worth.
• Independence & Staffing: Firms must appoint an independent Compliance Officer by April 2026, and all relevant staff must clear mandatory NISM certifications.
• Operational Restrictions: SEBI has banned the outsourcing of core activities and mandated "Chinese Walls" to separate merchant banking from other business units.

Question:

Q.1 What is the final net worth requirement for existing Category I merchant bankers under the phased implementation of SEBI (Merchant Bankers) Amendment Regulations, 2025?
a) ₹25 crore
b) ₹50 crore
c) ₹10 crore
c) ₹75 crore

Answer: b) Existing Category I merchant bankers must achieve a net worth of ₹25 crore by January 2, 2027 (Phase I), and increase it to ₹50 crore by January 2, 2028 (Phase II).