Zerodha, India's second-largest broker, has obtained a merchant banking license from the country's securities regulator, according to reports on September 2, 2026. The unit will enable the firm founded by billionaire Nithin Kamath to underwrite and manage public offerings as the Indian equity capital market draws fresh participants seeking fees from surging IPO activity.
Merchant banking in India permits firms to manage corporate fundraising, advise on mergers and acquisitions, and underwrite securities offerings. The license expands Zerodha beyond its core brokerage business into investment banking services at a time when India's IPO market has drawn consistent deal flow. Investment bank IPO fees reached $417 million in 2025, though 2026 year-to-date volumes show a slowdown: $5.78 billion raised through early September versus $7.32 billion in the same period last year.
Zerodha ranks behind HDFC Securities as India's second-largest retail broker by market share. The firm has grown from a discount brokerage startup founded in 2010 into a financial services platform with investments in insurance, credit and financial advisory units. The merchant banking move follows a broader trend among Indian brokers diversifying revenue beyond trading commissions as competition in retail brokerage intensifies.
The license positions Zerodha to compete with established investment banks and full-service brokers already active in Indian equity capital markets. India's IPO market saw 111 offerings raise roughly $14 billion in 2024, according to regulatory filings. The Securities and Exchange Board of India has in recent years accelerated approvals for merchant banking licenses to encourage competition and deepen capital markets infrastructure.
Zerodha founder Kamath has previously stated a goal to build Zerodha into a broader financial services ecosystem rather than remain confined to retail brokerage. The merchant banking license removes a regulatory barrier to that expansion and grants the firm direct participation in larger corporate financing transactions.
The license arrival coincides with India's equity offerings remaining steady despite global market volatility. If Zerodha launches an active merchant banking practice within the next two years, the firm would join a crowded field of domestic and foreign investment banks competing for IPO mandates in India's largest listed companies.
