SEBI panel suggests changes to merchant banking regulations

In August 2023, an Expert Committee led by S K Mohanty, former whole-time member of SEBI, was established to review the regulatory framework for merchant bankers. The Committee's focus included examining the relevance of existing rules, which were crafted over 30 years ago, to the current market dynamics. \r

Subsequently, SEBI proposed significant changes aimed at modernizing the framework to better align with present-day requirements. One notable recommendation involves permitting individuals with foreign degrees to act as merchant bankers, alongside those with qualifications from Indian institutions recognized by the government. Additionally, the discussion paper advocates for adjustments in the calculation of minimum net worth for merchant banking firms, suggesting inclusion of "securities premium" as part of the criteria. \r

The proposal also addresses organizational structures, recommending amendments to accommodate limited liability partnerships alongside body corporates as eligible entities for merchant banking registration. This initiative follows SEBI's outreach to merchant bankers and industry bodies, such as the Association of Investment Bankers of India (AIBI), to gather feedback on the existing regulations. The public has until June 11 to submit comments on these recommendations, marking a crucial step in the evolution of merchant banking regulations in India.