SEBI started the effort to change the rules related to merchant bankers, licenses of many bankers may be cancelled.

New Delhi, 27 September (Hindustan Reporter). Market regulator Securities and Exchange Board of India (SEBI) has started the exercise to change the rules related to merchant bankers. Rules for merchant bankers were made in 1992. Despite the passage of more than three decades, there has been no change in these rules. Therefore, now SEBI has issued a consultation paper to make changes in these rules as per the time and circumstances. In this consultation paper, it has been proposed to include many new rules for merchant bankers. It is believed that if the new rules included in the consultation paper are implemented, the licenses of more than 100 merchant bankers may be cancelled.

The new rules included in SEBI's consultation paper also include a proposal that if a merchant banker does not earn a certain income through merchant banking related activities, his license can be cancelled. In SEBI's consultation paper regarding Category-1 merchant bankers, it has been said that if the revenue of a merchant banker from investment banking related activities during the last three financial years is less than Rs 25 crore on a combined basis, then his registration Will be cancelled. Experts say that this rule has been proposed because there are many merchant bankers registered with SEBI, whose share of investment banking in their work is very less. Such merchant bankers have registered themselves with SEBI only to keep their portfolio strong.

At present the number of merchant bankers registered with SEBI is around 225. It is believed that with the implementation of the new rules proposed in the consultation paper, the registration of more than 100 merchant bankers may be cancelled. However, experts believe that even if the licenses of such a large number of merchant bankers are cancelled, it will not have much impact on the functioning of the market. This is being said because the merchant bankers whose registrations are likely to be canceled due to the proposed new rules of SEBI are still not very active.