Sebi proposes overhaul of merchant banker norms
Sebi has proposed to revamp rules for merchant bankers handling public issues, by increasing the net worth requirement 10- times to ₹50 crore from ₹5 crore, introduction of minimum liquid net worth and barred them from holding securities in the issuer company. «This may lead to conflict of interest and compromised due diligence,» Sebi said in a discussion paper.
As on July 31, there are 224 merchant bankers registered with Sebi. Their activities include handling public issuances, international offerings such as global depository receipts, underwriting issues and corporate advisory.
Sebi has proposed to introduce two categories of merchant banker based on net worth and activity. Category-1, would have to maintain a networth of Rs 50 crore at all times and would be allowed to undertake all permitted activities, while category- 2, would be required to maintain a networth of Rs 10 crore and would be able to undertake all permitted activities except main board issues.
Further, it said merchant banker would have to maintain liquid net worth of 25% of the minimum net worth requirement.
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