SEBI updated merchant banker rules in Dec 2024, setting capital and activity limits and replacing merchant bankers with independent valuers for ESOPs to improve transparency.

SEBI has updated merchant banker regulations effective December 3, 2024, introducing a capital adequacy framework requiring a minimum 25% liquid net worth and categorizing firms into two tiers based on net worth and permitted activities. Underwriting limits are capped at 20 times liquid net worth, and minimum revenue thresholds apply, with exceptions for non-convertible securities and debt instruments. The regulator also replaced merchant bankers with independent valuers for ESOP and sweat equity valuations to boost transparency.