Zerodha, facing a slump in active users, has applied for a SEBI merchant banking licence. This marks a clear pivot away from its core brokerage business, driven by tightening F&O regulations and fierce competition. Their move into investment banking could redefine revenue models for India's largest retail brokers.
How We Got Here
Zerodha's revenue and profits have been dented since October 2024 due to SEBI's increased Securities Transaction Tax on F&O trading. Earlier this month, the company secured an IFSCA licence to offer international equity investment, signalling its push for new revenue streams.
The Numbers
- The application was filed April 27 by Zerodha Corporate Advisors, a subsidiary of the broking platform.
- If approved, Zerodha can advise on IPOs, M&A, debenture issuance, and offer wealth management for high-net-worth individuals.
- SEBI raised the max investment limit for Basic Service Demat Accounts from ₹2 lakh to ₹10 lakh in September 2024, leading to lower fees for platforms.
- Zerodha lost 37,000 active clients in May 2026, while rival Groww added 27,600 in the same month.
- A dozen other firms, including InCred Capital and Neo Wealth Management, are also awaiting similar SEBI approvals.
What Happens Next
🇮🇳 Why This Matters for India
For Bangalore's Series A founders and Mumbai's growing HNI base, this could introduce a tech-first, lower-cost alternative to traditional investment bankers.
The Take
Zerodha's investment banking play signals a mature shift for tech-first platforms, now forced to look beyond razor-thin brokerage margins. The true test will be convincing high-growth startups and established wealth to trust a broker with their IPOs.
Source:
MediaNama ↗