Zerodha, India’s largest stockbroker by active clients, is taking a significant step beyond its core business. The Bengaluru-based fintech company has applied for a Category I merchant banking license from the Securities and Exchange Board of India (SEBI), seeking to offer services such as initial public offering management, corporate advisory, and fund-raising. The application was submitted in April and awaits regulatory approval, a company spokesperson confirmed, adding that more details will be shared once the license is granted.
Strategic Expansion into Investment Banking
The move positions Zerodha to tap into India’s booming IPO pipeline, as dozens of startups and new-age companies prepare to go public over the coming years. A merchant banking license would allow Zerodha to help these firms navigate public offerings, raising capital through the stock market. This expansion comes as the company already offers a wide array of financial services—mutual funds, lending, asset management, startup investments via Rainmatter, international investing, and fixed deposits through its Coin platform.
By adding investment banking to its portfolio, Zerodha aims to diversify revenue streams and reduce its reliance on brokerage income. In FY25, the company reported revenue of ₹8,847 crore and net profit of ₹4,237 crore, underscoring its financial strength as it ventures into new territory.
Competition and Market Impact
Zerodha’s entry into merchant banking could intensify competition in a sector traditionally dominated by established players such as JM Financial, Kotak Mahindra Capital, Axis Capital, and ICICI Securities. Industry experts believe that a digital-first approach from Zerodha may appeal especially to technology companies and startups, potentially improving service quality and offering more choices for businesses raising capital.
The application aligns with a broader trend of fintech companies moving into conventional financial services. As India’s public markets continue to attract new issuers, more firms are seeking merchant banking licenses, which could foster a more dynamic capital market ecosystem.
What This Means for Zerodha’s Future
If SEBI approves the license, Zerodha will join a growing list of full-service financial companies. The company recently launched fixed deposit investments on its Coin platform, allowing customers to invest across partner banks from a single interface. Expanding into investment banking would further solidify its presence in the capital markets and create new income sources, supporting long-term growth.
Zerodha’s latest move highlights how fintech innovators are reshaping traditional finance. With strong fundamentals and a loyal user base, the company is well-positioned to compete for IPO and fund-raising mandates in the years ahead—pending the regulator’s green light.