SEBI Proposes Stricter Norms for Merchant Bankers

The Securities and Exchange Board of India (Sebi) proposes enhanced qualification requirements and increased net worth thresholds for merchant bankers. Categorization into two groups based on net worth is suggested, with new experience and eligibility criteria. Public comments are invited until September 18.

The Securities and Exchange Board of India (Sebi) on Wednesday proposed stricter norms for merchant bankers, significantly enhancing qualification requirements and raising the net worth threshold by tenfold to Rs 50 crore.

The proposed guidelines include categorization of merchant bankers into Category 1 and Category 2 based on their net worth and permissible activities. Category 1 merchant bankers must maintain a net worth of at least Rs 50 crore at all times, while Category 2 must have a net worth of at least Rs 10 crore but will be restricted from handling main board issues.

Sebi also suggested that merchant bankers should not undertake valuation except as specified by the board. Additionally, the compliance officer should have specialized qualifications and experience. Comments from the public are invited until September 18 on these proposals.

(With inputs from agencies.)