#Sebi proposes overhaul of merchant banker norms

Sebi has proposed major changes to the regulations governing merchant bankers involved in public issues. The new rules include increasing the net worth requirement tenfold to ₹50 crore from ₹5 crore.The current net worth requirement for merchant bankers is Rs 5 crore, which was last hiked in 1992 from Rs 1 crore.

The regulator has now proposed to have two categories of investment banks based on their net worth.

Those with at least Rs 50 crore net worth will fall under Category 1 and will be allowed to undertake all activities that fall under Sebi’s ambit.

Meanwhile, those with net worth of at least Rs 10 crore will fall under the Category 2 not be allowed to handle main board issues.

Further, the regulator has proposed that merchant banks maintain a fourth of their net worth in “liquid” assets — those that can be easily converted into cash.

At present, there are over 200 registered merchant bankers in the country, which help companies launch an initial public offering (IPO) or a listed entity raise additional funds via qualified institutional placements or offer for sale.

Corporate Capital Ventures, a leading merchant banker, recently faced a raid resulting in temporary account freezes and a brief stock dip. Despite this, the associated companies are performing well and are expected to recover swiftly