Zerodha, India’s leading discount brokerage platform, applied last month to the Securities and Exchange Board of India (SEBI) for a Category-I merchant banking licence. This licence would allow Zerodha to manage initial public offerings (IPOs) and advise on mergers and acquisitions (M&As), placing it alongside established players like SBI, Kotak, Axis Capital, and ICICI Securities, according to inc42.com.
The move marks a strategic shift for Zerodha, which has built its reputation on zero-commission trading. The company plans to leverage its 68 lakh-plus user base and approximately 10% share of retail and high-net-worth individual assets under management through its wealth tech arm. Zerodha aims to use this investor access and data to differentiate itself in investment banking and become a preferred partner for companies seeking to list on stock exchanges, inc42.com reported.
This expansion comes as regulatory changes tighten rules around derivatives trading, prompting Zerodha to diversify its revenue streams. The firm is also developing other monetisation channels such as margin trading facilities, wealth management services, and secured lending against securities. These initiatives have begun generating income, helping Zerodha reduce its dependence on speculative market activity, according to inc42.com. The merchant banking licence would further solidify Zerodha’s position in India’s financial services sector.
Zerodha’s application for the Category-I merchant banking licence is currently under review by SEBI. Approval would enable the company to officially enter the investment banking domain, a significant evolution from its discount brokerage origins, inc42.com noted.