SBU transfer moved to December 31, 2026. Phase I/II net worth and liquid net worth shifted to March 31, 2027 and March 31, 2028. Category I/II intimation deadline aligned to March 31, 2027.
SEBI Extends Key Compliance Deadlines for Merchant Bankers on SBU, Net Worth and Liquid Net Worth (June 11, 2026)
24 min read4,264 wordsExtension of timelines for compliance with certain provisions of Circular dated January 02, 2026Effective: 11 June 2026Last amended: 11 June 2026Medium impact12 views
Summary
SEBI’s June 11, 2026 circular gives merchant bankers more time to transfer activities into Separate Business Units and to meet phased net worth and liquid net worth thresholds, while also extending the deadline to intimate Category I/II status; all other January 2026 obligations stay unchanged.
Quick AnswerAI
SEBI has selectively extended SBU, net worth, liquid net worth, and category‑intimation deadlines for merchant bankers to year‑end dates, without relaxing any other January 2026 obligations.
Key Takeaways
SEBI circular HO/49/14/15(2)2026‑CFD‑POD1/I/13567/2026 extends select deadlines under the January 2, 2026 MB Circular.
SBU transfer and Clause 11.2.1/11.2.10 compliance now due by December 31, 2026 (earlier July 3, 2026).
Phase I and Phase II net worth under Regulation 7 now due by March 31, 2027 and March 31, 2028 (earlier January 2, 2027/2028).
Liquid net worth under Regulation 7A follows the same new March 31, 2027 and March 31, 2028 timelines.
Existing merchant bankers must intimate SEBI of Category I/II status with CA‑certified net worth by March 31, 2027.
All other provisions of the January 2, 2026 MB Circular remain unchanged and fully in force.
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<h2>SEBI Extends Compliance Deadlines for Merchant Bankers — Timeline Relief on SBU, Net Worth and Liquid Net Worth Requirements (June 11, 2026)</h2>
<p>On <strong>June 11, 2026</strong>, the Securities and Exchange Board of India issued Circular No. <strong>HO/49/14/15(2)2026-CFD-POD1/I/13567/2026</strong> granting targeted extensions to several compliance deadlines that merchant bankers were required to meet under the earlier circular dated <strong>January 02, 2026</strong>. The January circular had operationalised the sweeping amendments to the <strong>SEBI (Merchant Bankers) Regulations, 1992</strong> — introducing enhanced capital adequacy norms, Separate Business Unit requirements, underwriting limits, and new governance obligations. The June 11 extension circular now adjusts key implementation dates, giving merchant bankers additional runway to meet some of the most operationally intensive requirements.</p>
<div class="mb-sum">
<h3>📋 Quick Reference — Circular Details</h3>
<div class="mb-meta">
<div class="mb-mi"><span class="lbl">Circular No.</span>HO/49/14/15(2)2026-CFD-POD1/I/13567/2026</div>
<div class="mb-mi"><span class="lbl">Date</span>June 11, 2026</div>
<div class="mb-mi"><span class="lbl">Issued By</span>SEBI — CFD-POD1 (Corporation Finance Department)</div>
<div class="mb-mi">
<span class="lbl">Amends</span>
SEBI Circular No. HO/49/11/11(106)2025-CFD-RAC-DIL3/I/1796/2026 dated January 02, 2026 on Merchant Banker compliance requirements
</div>
<div class="mb-mi">
<span class="lbl">Provisions Extended</span>
SBU Transfer (Reg. 13A(2) & Clause 11.2.1), Clause 11.2.10, Phase I & II Net Worth (Reg. 7), Liquid Net Worth (Reg. 7A), Intimation of Category I/II (MB Circular)
</div>
<div class="mb-mi"><span class="lbl">Rest of Jan 2026 Circular</span>All other provisions remain unchanged and must be complied with as scheduled</div>
</div>
</div>
<div class="nr">
<div class="nc">
<span class="nb">Dec 31</span>
<div class="nl">2026 — new deadline for SBU transfer and Clause 11.2.10</div>
</div>
<div class="nc g">
<span class="nb">Mar 31</span>
<div class="nl">2027 — revised Phase I net worth and liquid net worth deadline</div>
</div>
<div class="nc t">
<span class="nb">Mar 31</span>
<div class="nl">2028 — revised Phase II net worth and liquid net worth deadline</div>
</div>
<div class="nc o">
<span class="nb">~6 months</span>
<div class="nl">Extra time given for SBU transfer vs original July 3, 2026 deadline</div>
</div>
<div class="nc p">
<span class="nb">Mar 31</span>
<div class="nl">2027 — new deadline to intimate SEBI about Category I/II categorisation</div>
</div>
</div>
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<h2>Background — The January 2, 2026 Circular That Started This</h2>
<p>To understand the extension, one must first understand what the January 2, 2026 circular required. The SEBI (Merchant Bankers) Regulations, 1992 were substantively amended in 2025 — the most comprehensive overhaul of the merchant banking regulatory framework in decades. These amendments raised capital adequacy standards, restructured how merchant bankers can run their businesses, and significantly tightened governance and disclosure norms.</p>
<h3>What the January 2026 Circular Introduced</h3>
<p>The January 2, 2026 circular was the operational implementation document — it translated the regulatory amendments into specific, time-bound compliance requirements for every registered merchant banker. Its key provisions covered:</p>
<h4>Capital Adequacy — Enhanced Net Worth Requirements</h4>
<p>The amended Regulation 7 of the SEBI (Merchant Bankers) Regulations substantially raised the minimum net worth thresholds that merchant bankers must maintain. The January circular prescribed phased compliance in two phases — Phase I and Phase II — to allow existing merchant bankers adequate time to build up capital without immediate disruption. Phase I covered an intermediate threshold; Phase II covered the final, higher threshold.</p>
<h4>Liquid Net Worth — Regulation 7A</h4>
<p>A new requirement for maintaining a minimum level of <strong>liquid net worth</strong> — not just overall net worth — was introduced. Liquid net worth requirements ensure that a merchant banker's capital is not entirely locked in illiquid assets; a portion must be in liquid form readily available to meet operational obligations and client commitments. The January circular prescribed timelines for compliance with Regulation 7A.</p>
<h4>Separate Business Units — Regulation 13A(2)</h4>
<p>Regulation 13A(2) requires merchant bankers to segregate certain activities — particularly those that create conflicts of interest with their primary merchant banking function — into <strong>Separate Business Units (SBUs)</strong>. Clauses 11.2.1 and 11.2.10 of the January circular set out the SBU-related activities, timelines, and compliance modalities.</p>
<h4>Other Requirements That Remain Unchanged</h4>
<p>The January circular also introduced several other requirements that are NOT extended by the June 11 circular and must continue to be met as per the original schedule. These include NISM certification requirements for key personnel, appointment of independent compliance officers, experience requirements for principal officers, prohibition on outsourcing core merchant banking activities, underwriting exposure limits, and minimum revenue thresholds. Merchant bankers must note that the June 11 extension is selective — it does not provide blanket relief.</p>
<div class="hb blue">
<h4>💡 Why Extensions Were Needed — The Operational Complexity</h4>
<p>The structural requirements in the January 2026 circular — especially SBU formation and capital augmentation — are operationally complex. Creating a Separate Business Unit is not just a paperwork exercise; it requires changes to corporate structure, staff reallocation, system separation, regulatory filings, and board approvals. Similarly, raising net worth to meet enhanced capital thresholds may require fundraising, retention of profits, or restructuring of balance sheets. These take time. Industry representations to SEBI highlighted genuine operational bottlenecks, and the June 11 circular reflects SEBI's pragmatic response.</p>
</div>
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<h2>The Extended Timelines — What Changed and By How Much</h2>
<p>The June 11, 2026 circular modifies specific deadline provisions of the January 2, 2026 circular. Below is a comprehensive account of each extension:</p>
<h3>Separate Business Unit Transfer — Regulation 13A(2) and Clause 11.2.10</h3>
<p>Regulation 13A(2) requires merchant bankers to transfer certain activities into Separate Business Units to prevent conflicts of interest. Clause 11.2.1 of the January MB Circular lays down the transfer of activities to SBUs, while Clause 11.2.10 prescribes additional SBU-related compliance. All of these now share the same revised deadline.</p>
<div class="dl-grid">
<div class="dl-card">
<span class="dl-reg">Regulation 13A(2)</span>
<span class="old">Earlier: July 3, 2026</span>
<span class="new-d">December 31, 2026</span>
<h5>Transfer of Activities to Separate Business Unit</h5>
<p>Merchant bankers now have until December 31, 2026 to complete the structural transfer of specified activities into their Separate Business Units. This gives approximately six additional months beyond the original July 3, 2026 deadline.</p>
</div>
<div class="dl-card">
<span class="dl-reg">Clause 11.2.10 — Jan 2026 Circular</span>
<span class="old">Earlier: July 3, 2026</span>
<span class="new-d">December 31, 2026</span>
<h5>Compliance with Clause 11.2.10</h5>
<p>Clause 11.2.10 of the January 2026 circular set specific operational compliance requirements linked to the SBU framework. This deadline is also extended to December 31, 2026 — consistent with the Regulation 13A(2) extension since both relate to the same SBU formation process.</p>
</div>
</div>
<div class="hb orange">
<h4>📌 What Does "Separate Business Unit" Mean?</h4>
<p>An SBU is a structurally distinct operational unit within the merchant banker's organisational framework — with separate accounts, distinct management, independent staff, and ring-fenced resources — for conducting activities that are ancillary to or potentially conflicting with the core merchant banking function. For example, advisory and distribution activities that a merchant banker may conduct alongside its primary role of lead managing public offerings must be housed in a separate unit to prevent advisory conflicts from influencing underwriting decisions. The formation of SBUs requires formal board approval, changes to internal operating procedures, and potentially amendments to registration documents filed with SEBI.</p>
</div>
<h3>Net Worth Requirements — Regulation 7 (Phase I and Phase II)</h3>
<p>The amended Regulation 7 prescribes substantially higher minimum net worth thresholds for merchant bankers, implemented in two phases to cushion the transition for existing registered entities.</p>
<h4>Phase I Net Worth — Revised from January 2, 2027 to March 31, 2027</h4>
<p>The Phase I enhanced net worth requirement, which was originally required to be met by <strong>January 2, 2027</strong>, has been pushed back by approximately three months to <strong>March 31, 2027</strong>. Phase I represents an intermediate capital threshold — higher than what was required before the 2025 amendments but lower than the final Phase II target. This extension allows merchant bankers working to build capital through profit retention, equity infusion, or fresh capital raising to align these efforts with a financial year-end date (March 31), which is more practical from an auditing, accounting, and balance sheet perspective.</p>
<h4>Phase II Net Worth — Revised from January 2, 2028 to March 31, 2028</h4>
<p>Similarly, the Phase II net worth requirement — the final, higher threshold — is extended from <strong>January 2, 2028</strong> to <strong>March 31, 2028</strong>. Both phases are now aligned with the end of Indian financial years (FY 2026-27 and FY 2027-28 respectively), which simplifies capital planning for merchant bankers as they can structure fundraising and profit retention within clear annual financial planning cycles.</p>
<div class="hb teal">
<h4>🔎 Why Year-End Alignment Matters for Net Worth Compliance</h4>
<p>Net worth is verified from audited balance sheets. A compliance date of January 2 falls mid-financial-year — requiring either a special capital infusion or mid-year audit to demonstrate compliance. Moving the deadlines to March 31 means net worth is verified from the annual audited financial statements, which every merchant banker already produces. This reduces compliance friction, eliminates the need for special mid-year valuations, and makes it easier for SEBI to verify compliance as part of the normal annual regulatory review process.</p>
</div>
<h3>Liquid Net Worth Requirements — Regulation 7A</h3>
<p>The new liquid net worth requirements under Regulation 7A follow the same pattern as the net worth extensions under Regulation 7. The exact new deadlines mirror the Phase I and Phase II net worth timelines, ensuring consistency and operational alignment between the two complementary capital requirements. Merchant bankers must meet both overall net worth (Regulation 7) and liquid net worth (Regulation 7A) thresholds — the liquid requirement ensures that a portion of capital is readily accessible and not entirely committed to illiquid assets.</p>
<p>The revised deadlines for Regulation 7A liquid net worth compliance are therefore also <strong>March 31, 2027</strong> (Phase I equivalent) and <strong>March 31, 2028</strong> (Phase II equivalent), aligned with the net worth deadlines.</p>
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<h2>Before and After — Complete Deadline Comparison</h2>
<div class="tw">
<table class="tt">
<thead>
<tr>
<th>Provision</th>
<th>Regulatory Reference</th>
<th>Original Deadline</th>
<th>Revised Deadline</th>
<th>Extension Granted</th>
</tr>
</thead>
<tbody>
<tr>
<td>Transfer of activities to SBU</td>
<td>Regulation 13A(2)</td>
<td><span class="tdn">July 3, 2026</span></td>
<td><span class="tdy">December 31, 2026</span></td>
<td>~6 months</td>
</tr>
<tr>
<td>Clause 11.2.10 compliance</td>
<td>Para 11.2.10 of Jan 2 Circular</td>
<td><span class="tdn">July 3, 2026</span></td>
<td><span class="tdy">December 31, 2026</span></td>
<td>~6 months</td>
</tr>
<tr>
<td>Phase I Net Worth</td>
<td>Regulation 7</td>
<td><span class="tdn">January 2, 2027</span></td>
<td><span class="tdy">March 31, 2027</span></td>
<td>~3 months</td>
</tr>
<tr>
<td>Phase II Net Worth</td>
<td>Regulation 7</td>
<td><span class="tdn">January 2, 2028</span></td>
<td><span class="tdy">March 31, 2028</span></td>
<td>~3 months</td>
</tr>
<tr>
<td>Phase I Liquid Net Worth</td>
<td>Regulation 7A</td>
<td><span class="tdn">January 2, 2027 (equivalent)</span></td>
<td><span class="tdy">March 31, 2027</span></td>
<td>~3 months</td>
</tr>
<tr>
<td>Phase II Liquid Net Worth</td>
<td>Regulation 7A</td>
<td><span class="tdn">January 2, 2028 (equivalent)</span></td>
<td><span class="tdy">March 31, 2028</span></td>
<td>~3 months</td>
</tr>
<tr>
<td>Intimation to SEBI of Category I/II status</td>
<td>MB Circular (Categorisation requirement)</td>
<td><span class="tdn">January 2, 2027</span></td>
<td><span class="tdy">March 31, 2027</span></td>
<td>~3 months</td>
</tr>
<tr>
<td>NISM Certification for Key Personnel</td>
<td>Jan 2026 Circular — other para</td>
<td colspan="3" style="color:var(--mu);font-style:italic;text-align:center;">Not extended — original schedule applies</td>
</tr>
<tr>
<td>Independent Compliance Officer appointment</td>
<td>Jan 2026 Circular — other para</td>
<td colspan="3" style="color:var(--mu);font-style:italic;text-align:center;">Not extended — original schedule applies</td>
</tr>
<tr>
<td>Underwriting exposure limits</td>
<td>Amended MB Regulations</td>
<td colspan="3" style="color:var(--mu);font-style:italic;text-align:center;">Not extended — original schedule applies</td>
</tr>
<tr>
<td>All other provisions of Jan 2 Circular</td>
<td>Various</td>
<td colspan="3" style="color:var(--mu);font-style:italic;text-align:center;">Not extended — all original deadlines remain in force</td>
</tr>
</tbody>
</table>
</div>
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<h2>Regulatory Timeline — How We Got Here</h2>
<div class="tl-wrap">
<div class="tl-r">
<div class="tl-n">1</div>
<div class="tl-b">
<span class="tl-tag">2025</span>
<h5>SEBI Amends the Merchant Bankers Regulations, 1992</h5>
<p>SEBI notified amendments to the SEBI (Merchant Bankers) Regulations, 1992 — the first major overhaul in decades. The amendments introduced enhanced capital requirements, SBU structures, governance reforms, and tighter oversight of merchant banking activities.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">2</div>
<div class="tl-b">
<span class="tl-tag">January 2, 2026</span>
<h5>SEBI Issues Consequential Compliance Circular</h5>
<p>SEBI issued the detailed operational circular specifying phased timelines for compliance with each amended provision — including SBU formation (July 3, 2026), Phase I net worth (January 2, 2027), Phase II net worth (January 2, 2028), liquid net worth, NISM certifications, principal officer requirements, and the prohibition on outsourcing core activities.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">3</div>
<div class="tl-b">
<span class="tl-tag rd">January 2026 — June 2026</span>
<h5>Industry Represents Operational Challenges</h5>
<p>Merchant banker associations and individual registered entities represented to SEBI that certain requirements — particularly SBU formation and capital augmentation — required additional time due to structural complexity, board approvals needed, capital market conditions, and the year-end alignment issue for net worth verification.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">4</div>
<div class="tl-b">
<span class="tl-tag g">June 11, 2026</span>
<h5>SEBI Grants Targeted Extensions — This Circular</h5>
<p>SEBI issued Circular No. HO/49/14/15(2)2026-CFD-POD1/I/13567/2026 extending the most operationally intensive deadlines while keeping all other January 2026 requirements intact. SBU deadlines extended by ~6 months; net worth and liquid net worth deadlines aligned with financial year-end dates.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">5</div>
<div class="tl-b">
<span class="tl-tag">December 31, 2026</span>
<h5>New Deadline — SBU Transfer and Clause 11.2.10</h5>
<p>All merchant bankers must have transferred specified activities to Separate Business Units and complied with Clause 11.2.10 by this date. No further extensions are anticipated — merchant bankers should treat December 31, 2026 as a hard deadline.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">6</div>
<div class="tl-b">
<span class="tl-tag">March 31, 2027</span>
<h5>Phase I Net Worth and Liquid Net Worth</h5>
<p>Enhanced Phase I net worth (Regulation 7) and Phase I liquid net worth (Regulation 7A) thresholds must be met by the end of FY 2026-27, and existing merchant bankers must also intimate SEBI of their categorisation as Category I or Category II by this date along with the required Chartered Accountant-certified net worth certificate. These obligations are verified from annual audited balance sheets, so capital planning and documentation should be aligned well in advance.</p>
</div>
</div>
<div class="tl-r">
<div class="tl-n">7</div>
<div class="tl-b">
<span class="tl-tag">March 31, 2028</span>
<h5>Phase II Net Worth and Liquid Net Worth</h5>
<p>Final Phase II net worth and liquid net worth thresholds must be met by the end of FY 2027-28. This represents the fully phased-in enhanced capital standard for the Indian merchant banking industry.</p>
</div>
</div>
</div>
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<h2>What Is NOT Extended — Provisions That Must Be Met as Originally Scheduled</h2>
<p>The June 11 circular is explicit: <em>"All other provisions of the January 2, 2026 circular will remain unchanged and must continue to be complied with by merchant bankers."</em> Merchant bankers must not assume that all January 2026 deadlines have been relaxed. The following remain on their original schedule:</p>
<div class="prov-list">
<div class="prov-item">
<div class="prov-num">1</div>
<div class="prov-body">
<h5>NISM Certification Requirements</h5>
<p>Key investment banking personnel must hold valid NISM certifications as specified in the January circular. No extension has been granted — the original timelines apply. Merchant bankers whose team members have not yet certified must ensure compliance immediately.</p>
</div>
</div>
<div class="prov-item">
<div class="prov-num">2</div>
<div class="prov-body">
<h5>Appointment of Independent Compliance Officers</h5>
<p>The requirement for merchant bankers to appoint an independent compliance officer — distinct from operational staff and reporting directly to the Board/senior management — was already effective per the January schedule. No extension has been granted. Non-compliance is a significant governance risk.</p>
</div>
</div>
<div class="prov-item">
<div class="prov-num">3</div>
<div class="prov-body">
<h5>Principal Officer Experience Requirements</h5>
<p>The amended regulations and January circular prescribed minimum experience requirements for principal officers of merchant bankers. These qualification standards remain in effect as originally scheduled.</p>
</div>
</div>
<div class="prov-item">
<div class="prov-num">4</div>
<div class="prov-body">
<h5>Prohibition on Outsourcing Core Activities</h5>
<p>Merchant bankers are prohibited from outsourcing core merchant banking activities to third parties. This is a structural regulatory requirement that has been in effect since the January circular and no extension has been provided.</p>
</div>
</div>
<div class="prov-item">
<div class="prov-num">5</div>
<div class="prov-body">
<h5>Underwriting Exposure Limits</h5>
<p>Limits on the aggregate underwriting exposure a merchant banker can take on — relative to its net worth — remain in effect as per the original schedule. No extension granted.</p>
</div>
</div>
<div class="prov-item">
<div class="prov-num">6</div>
<div class="prov-body">
<h5>Minimum Revenue Thresholds and Disclosure Requirements</h5>
<p>Enhanced disclosure norms and minimum revenue thresholds specified in the January circular remain as scheduled. Merchant bankers must ensure their periodic disclosures to SEBI and clients meet the enhanced standards already in effect.</p>
</div>
</div>
</div>
<div class="hb red">
<h4>⚠ Warning — Do Not Treat This as Blanket Relief</h4>
<p>The June 11 circular extends <strong>only specific, named provisions</strong>. Every other obligation in the January 2, 2026 circular is fully in force on its original schedule. Merchant bankers who have delayed compliance on any non-extended provision must take immediate corrective action. SEBI has been active in enforcement action against merchant bankers — non-compliance with the January circular's requirements that are not extended carries the full risk of regulatory action, show-cause notices, suspension, or cancellation of registration.</p>
</div>
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<h2>Impact and Immediate Action Points for Merchant Bankers</h2>
<h3>For Compliance and Legal Teams</h3>
<p>The immediate task for every registered merchant banker's compliance team is to review the updated deadline matrix from the June 11 circular against your firm's current compliance status. Map each provision of the January 2026 circular to its deadline — original or revised — and establish internal milestones that work backwards from each deadline to allow adequate preparation time.</p>
<p>For the <strong>SBU formation</strong> (now due December 31, 2026), if a merchant banker has not yet initiated the structural work — corporate governance approvals, board resolutions, operational separation, staff allocation, and system segregation — the December 31 deadline is closer than it appears. Six months for a structural reorganisation of business units is tight. Start immediately.</p>
<h3>For Finance and Treasury Teams</h3>
<p>The alignment of net worth and liquid net worth deadlines with <strong>March 31, 2027</strong> and <strong>March 31, 2028</strong> respectively is a significant planning relief. Finance teams should now model capital requirements as part of the regular annual operating plan and capital planning cycle. The Phase I threshold (March 31, 2027) falls at the end of FY 2026-27 — meaning the FY 2026-27 annual operating plan should explicitly include capital augmentation targets if the current net worth is below the Phase I threshold. Retained earnings, fresh equity, and capital restructuring should all be evaluated.</p>
<h3>For Senior Management and Boards</h3>
<p>Board-level attention is required for both the SBU compliance and the capital adequacy planning. Separate Business Unit formation requires formal board approval under most corporate governance frameworks. The board must pass resolutions approving the SBU structure, the transfer of activities, and any amendments to the company's operating structure. This board action should be placed on the agenda for the next scheduled meeting — or an emergency meeting if the company is behind schedule on SBU preparation.</p>
<div class="hb green">
<h4>✅ Recommended Action Checklist for Merchant Bankers</h4>
<ul>
<li>Map current compliance status against every provision of the January 2026 circular</li>
<li>Identify which of the extended provisions (SBU, net worth, liquid net worth) you are yet to comply with</li>
<li>For SBU formation: initiate board resolution, identify activities to be transferred, set up internal structure — <strong>target completion by September 30, 2026</strong> to avoid a last-minute rush at December 31</li>
<li>For net worth: compute current net worth gap vs Phase I threshold; model retention/equity infusion needed by March 31, 2027</li>
<li>For all non-extended provisions: verify current compliance status and address any gaps immediately</li>
<li>Update your Compliance Calendar and escalate any at-risk provisions to senior management</li>
<li>Ensure all NISM certifications for key personnel are current and valid</li>
<li>Verify independent compliance officer appointment is in place and documented</li>
</ul>
</div>
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<h2>Legal Framework and Regulatory Authority</h2>
<p>The June 11, 2026 circular is issued under <strong>Section 11(1) of the Securities and Exchange Board of India Act, 1992</strong> — the plenary power that enables SEBI to take measures as it considers necessary in the interest of investors and orderly development of the securities market. This is combined with <strong>Regulation 45 of the SEBI (Merchant Bankers) Regulations, 1992</strong>, which empowers SEBI to issue guidelines and directives to merchant bankers for implementation of the Regulations.</p>
<p>The combination of these two authorities gives SEBI the power both to prescribe compliance requirements and to modify their timelines when legitimate operational considerations justify such modification — as is the case with the June 11 extension circular.</p>
<div class="hb purple">
<h4>📖 About the SEBI (Merchant Bankers) Regulations, 1992</h4>
<p>The SEBI (Merchant Bankers) Regulations, 1992 govern all entities carrying out merchant banking activities in India — primarily lead managing public issues (IPOs, FPOs, rights issues), managing open offers (under SEBI <a href="/glossary/takeover-code" class="text-gold font-semibold hover:underline" title="Takeover Code definition">Takeover Code</a>), and providing issue-related services. Every entity that acts as a lead manager to a public issue must be registered as a Category I Merchant Banker with SEBI. The regulations cover registration, capital adequacy, conduct of business, obligations, disclosures, and prohibitions. The 2025 amendments to these regulations — implemented through the January 2026 circular and partially extended by the June 11 circular — represent the most significant revision to the merchant banking framework since the regulations were first notified.</p>
</div>
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<h2>Frequently Asked Questions</h2>
<div class="fq">Q1. What is the SEBI circular dated June 11, 2026 about?</div>
<div class="fa">It is a circular (No. HO/49/14/15(2)2026-CFD-POD1/I/13567/2026) that grants targeted extensions to certain compliance deadlines that were set in the earlier SEBI circular dated January 02, 2026. The January circular had laid out the implementation roadmap for compliance with the amended SEBI (Merchant Bankers) Regulations, 1992. The June circular extends deadlines for: (1) transfer of activities to Separate Business Units under Regulation 13A(2) and Clause 11.2.10 — from July 3, 2026 to December 31, 2026; and (2) Phase I and Phase II net worth requirements (Regulation 7) and liquid net worth requirements (Regulation 7A) — shifted to March 31, 2027 and March 31, 2028 respectively.</div>
<div class="fq">Q2. Does this extension apply to all merchant bankers in India?</div>
<div class="fa">Yes. The June 11, 2026 circular applies to all SEBI-registered merchant bankers. There is no category-specific differentiation — all registered merchant bankers benefit from the extended timelines for the specific provisions covered in the circular. All other provisions of the January 2, 2026 circular that are not specifically mentioned in the June 11 extension remain on their original schedules for all merchant bankers.</div>
<div class="fq">Q3. What is a Separate Business Unit (SBU) and why is it required?</div>
<div class="fa">An SBU is a structurally distinct operational unit within a merchant banker's business where certain activities — typically those that can create conflicts of interest with core merchant banking functions — must be separately housed. The requirement stems from Regulation 13A(2) of the SEBI (Merchant Bankers) Regulations. By operating conflicting activities in structurally separate units with independent management, accounts, and staff, the regulation aims to ensure that advisory or distribution activities do not compromise the integrity of a merchant banker's role as a lead manager to public issues.</div>
<div class="fq">Q4. What is the difference between net worth and liquid net worth requirements?</div>
<div class="fa">Net worth (Regulation 7) refers to the overall capital adequacy requirement — the total net worth of the merchant banker including all assets minus liabilities. Liquid net worth (Regulation 7A) is a sub-requirement that mandates a certain portion of the net worth to be maintained in liquid form (cash, liquid investments, marketable securities) rather than entirely in illiquid assets. Liquid net worth ensures that merchant bankers can meet operational obligations without having to liquidate long-term assets. Both requirements have Phase I and Phase II thresholds, both now extended to March 31, 2027 and March 31, 2028 respectively.</div>
<div class="fq">Q5. Are NISM certification requirements also extended?</div>
<div class="fa">No. NISM certification requirements for key personnel of merchant bankers are not among the provisions extended by the June 11 circular. The original deadlines from the January 2, 2026 circular apply for NISM certifications. All other provisions not specifically named in the June 11 extension also remain on their original schedules. Merchant bankers should not assume blanket relief — only the provisions explicitly named in the June 11 circular have been extended.</div>
<div class="fq">Q6. Can SEBI grant further extensions beyond these revised deadlines?</div>
<div class="fa">While SEBI has the power to grant further extensions, the June 11 circular does not commit to or hint at any further relief. Merchant bankers should treat these revised deadlines as final and plan accordingly. The 2025 amendments to the Merchant Bankers Regulations were deliberate and well-considered policy decisions by SEBI to strengthen the Indian merchant banking industry. The extensions are operational accommodations, not a dilution of the regulatory intent. Further delays beyond the revised deadlines would likely attract regulatory scrutiny.</div>
<div class="fq">Q7. Has the deadline to intimate SEBI about Category I/II status also been extended?</div>
<div class="fa">Yes. The June 11, 2026 circular also extends the deadline for existing merchant bankers to intimate SEBI regarding whether they will be Category I or Category II merchant bankers, along with a Chartered Accountant-certified net worth certificate. The original deadline of January 2, 2027 is now aligned with the financial year-end — March 31, 2027 — consistent with the Phase I net worth and liquid net worth timelines.</div>
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<h2>Conclusion</h2>
<p>SEBI's June 11, 2026 circular is a targeted, calibrated intervention — not a wholesale rollback of the January 2026 compliance framework. By granting an additional six months for SBU formation and aligning net worth deadlines with financial year-end dates, SEBI has addressed the most operationally burdensome aspects of the merchant banker reform agenda while keeping the full framework substantively intact.</p>
<p>For registered merchant bankers, the message is clear: use this extension purposefully. The SBU formation work must begin immediately — December 31, 2026 is not far away for a structural reorganisation. The capital planning for net worth compliance should be integrated into the FY 2026-27 annual plan. And all non-extended provisions must continue to be met without exception. The SEBI (Merchant Bankers) Regulations, as amended, represent the new permanent baseline for the industry — and the phased timelines, with their extensions, are designed to ensure that every registered entity can reach that baseline without undue disruption.</p>
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<strong>Disclaimer:</strong> This article is for educational and informational purposes only. It is based on SEBI Circular No. HO/49/14/15(2)2026-CFD-POD1/I/13567/2026 dated June 11, 2026, the January 2, 2026 circular on Merchant Banker compliance requirements, and publicly available reporting on the same. While every effort has been made to ensure accuracy, this does not constitute legal or compliance advice. Merchant bankers should refer to the official SEBI circulars on sebi.gov.in and consult qualified legal and compliance professionals for specific guidance.
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