SEBI Extends SBU and Net Worth Compliance Deadlines for Merchant Bankers

Circular HO/49/14/15(2)2026-CFD-POD1/I/13567/2026, Dated 11.06.2026

SEBI has extended the timelines for compliance with certain requirements introduced under the amended Merchant Bankers regulatory framework, following representations from the industry regarding operational and implementation challenges.

The extension primarily concerns the Separate Business Unit (SBU) framework and the revised net worth and liquid net worth requirements set out in the amended regulations.

1. Extension for Separate Business Unit (SBU) Framework

Under the revised timeline, merchant bankers have been granted additional time to:

• Transfer eligible activities to Separate Business Units (SBUs); and
• Comply with related operational and organisational requirements under Regulation 13A.

The revised deadline for compliance is:

31 December 2026

2. Revised Timelines for Net Worth Requirements

SEBI has also extended the timelines for complying with the enhanced:

• Net worth requirements; and
• Liquid net worth requirements.

To align compliance with the financial year-end, the implementation schedule has been revised as follows:

2.1. Phase I Compliance

Due Date: 31 March 2027

2.2. Phase II Compliance

Due Date: 31 March 2028

These deadlines replace the earlier January-based compliance timelines.

3. Timeline Extended for Merchant Banker Categorisation

The deadline for informing SEBI regarding categorisation as a:

• Category I Merchant Banker; or
• Category II Merchant Banker

has also been extended.

The revised due date is:

31 March 2027

4. Reason for the Extension

SEBI stated that the extension has been granted in response to industry representations highlighting the practical challenges involved in implementing the revised framework.

The additional time is intended to enable merchant bankers to:

• Establish appropriate systems and controls;
• Develop operational processes;
• Implement governance structures; and
• Complete organisational restructuring is required under the amended regulations.

5. Other Provisions Remain Unchanged

SEBI has clarified that the extension applies only to the specified compliance timelines.

All other provisions contained in the circular dated 02 January 2026 continue to remain in force and must be complied with by merchant bankers.

6. Objective of the Extension

The revised timelines are intended to facilitate the smooth implementation of the amended Merchant Bankers framework while ensuring that regulated entities have sufficient time to make the necessary operational and structural changes. The extension seeks to balance regulatory objectives with practical implementation considerations and promote effective compliance with the revised regulatory regime.

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