SEBI Gives More Time to Merchant Bankers to Meet New Rules, Deadlines Extended Till 2028
The Securities and Exchange Board of India (SEBI) has provided relief to merchant bankers by extending the deadlines for complying with several new regulatory requirements. The decision was taken after industry participants informed SEBI that they were facing operational challenges in implementing the new rules within the originally prescribed timelines.
Merchant bankers are financial institutions that help companies raise money from investors through activities such as public issues, rights issues, mergers, acquisitions, and other capital market transactions. They play an important role in the functioning of India’s securities market.
Why Did SEBI Extend the Deadlines?
In December 2025, SEBI notified amendments to the Merchant Bankers Regulations. These amendments introduced stricter requirements relating to net worth and liquid net worth and also required merchant bankers to separate certain activities through dedicated Separate Business Units (SBUs).
Net worth refers to the financial strength of a company and is calculated by subtracting liabilities from total assets.
Liquid net worth refers to the portion of net worth that can be easily converted into cash and used to meet financial obligations.
Separate Business Unit (SBU) means a separate and independent division within a company that carries out specific activities with proper segregation from other business operations.
After the new rules were announced, many merchant bankers informed SEBI that additional time was needed to create the required systems, processes, and organizational structures. They also requested that the financial requirements be aligned with the end of the financial year.
Considering these concerns, SEBI has decided to extend the compliance deadlines.
New Deadline for Separate Business Units
Merchant bankers were originally required to transfer certain activities into Separate Business Units by July 3, 2026.
SEBI has now extended this deadline to December 31, 2026.
Similarly, compliance with Clause 11.2.10 of the earlier SEBI circular, which was also due by July 3, 2026, has now been extended to December 31, 2026.
Net Worth Compliance Deadlines Extended
Under the amended regulations, merchant bankers are required to maintain higher net worth levels in a phased manner.
The deadline for Phase I compliance with net worth requirements has been extended from January 2, 2027 to March 31, 2027.
The deadline for Phase II compliance has been extended from January 2, 2028 to March 31, 2028.
Liquid Net Worth Requirements Also Deferred
SEBI has also extended the timelines for meeting liquid net worth requirements.
The deadline for Phase I compliance has been shifted from January 2, 2027 to March 31, 2027.
Similarly, the deadline for Phase II compliance has been moved from January 2, 2028 to March 31, 2028.
More Time for Category Classification
Merchant bankers are also required to inform SEBI whether they fall under Category I or Category II Merchant Banker classification.
The deadline for submitting this information has been extended from January 2, 2027 to March 31, 2027.
Other Rules Remain Unchanged
SEBI has clarified that only the timelines have been revised. All other provisions of the circular issued on January 2, 2026 will remain unchanged and merchant bankers will continue to be required to comply with those provisions.
What This Means for Merchant Bankers
The extension provides additional time for merchant bankers to strengthen their financial position, create separate business structures where required, and establish the necessary compliance systems. The revised deadlines also align many requirements with the end of the financial year, making implementation easier for industry participants.
The circular was issued by SEBI on June 11, 2026, under the powers granted to it under the SEBI Act, 1992 and the SEBI (Merchant Bankers) Regulations, 1992.
