Sebi gives more time for merchant bankers to comply with SBU, net worth timelines

Markets regulator Sebi on Thursday extended the timelines for merchant bankers to comply with certain provisions related to separate business units (SBUs), net worth and liquid net worth requirements, citing operational challenges faced by the industry.

Under the revised timelines, merchant bankers will now have until December 31 to transfer activities to separate business units in accordance with Sebi (Merchant Bankers) Regulations. Earlier, the deadline was July 3, according to a circular issued by the markets regulator.

Further, the Phase I compliance deadline for enhanced net worth requirements has been extended to March 31, 2027, from January 2, 2027. The Phase II deadline has been shifted to March 31, 2028, from January 2, 2028.

Similarly, compliance timelines for Phase I and Phase II liquid net worth requirements have been extended to March 31, 2027, and March 31, 2028, respectively.

The deadline for merchant bankers to intimate Sebi regarding their categorisation as Category I or Category II merchant bankers has also been extended to March 31, 2027, from January 2, 2027.

The regulator said the decision was taken after receiving representations from market participants highlighting difficulties in establishing the necessary systems and processes for implementing the SBU framework and seeking alignment of compliance deadlines with the end of the financial year.

The provisions stem from the Sebi (Merchant Bankers) Regulations, 2025, notified on December 5, 2025, which revised the net worth and liquid net worth requirements applicable to merchant bankers and introduced a framework for segregation of activities through SBUs.