Is it mandatory to have a merchant banker for NSE/BSE listing?

Yes, having a merchant banker is mandatory for companies looking to get listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Merchant bankers, also known as SEBI-registered Category I Merchant Bankers, play a crucial role in the listing process by managing IPOs, conducting due diligence, and ensuring compliance with SEBI regulations.

1. Why is a Merchant Banker Required for NSE/BSE Listing?

A merchant banker is required for NSE/BSE listing because they help companies comply with regulatory requirements, underwrite shares, and ensure a smooth IPO process. Without a merchant banker, a company cannot proceed with the listing as they handle key aspects such as:

• Preparing and filing the Draft Red Herring Prospectus (DRHP) with SEBI.
• Conducting due diligence on the company’s financials, legal status, and compliance.
• Managing the Initial Public Offering (IPO) process.
• Ensuring pricing and valuation of shares.
• Overseeing regulatory approvals and investor relations.

2. Who Can Be a Merchant Banker in India?

In India, only institutions registered with Securities and Exchange Board of India (SEBI) as Category I Merchant Bankers can act as merchant bankers for an NSE/BSE listing. These include:

• Commercial banks (like SBI Capital Markets, ICICI Securities, etc.).
• Financial institutions with SEBI registration.
• Investment banks with merchant banking licenses.

These entities are responsible for structuring the IPO, pricing the shares, and managing regulatory requirements.

3. How Does a Merchant Banker Help in the Listing Process?

A merchant banker plays a critical role in every stage of an IPO, from documentation to post-listing support. Their key responsibilities include:

• IPO Structuring: Helping companies decide the type of IPO (fixed price or book-building).
• SEBI & Stock Exchange Approvals: Submitting necessary filings and documents for regulatory approval.
• Marketing the IPO: Promoting the IPO to institutional and retail investors.
• Underwriting: Ensuring the IPO receives sufficient investor interest.
• Allotment & Listing: Overseeing share allocation and ensuring smooth trading on NSE/BSE.

4. Conclusion

In conclusion, hiring a SEBI-registered merchant banker is mandatory for companies seeking to list on NSE or BSE. These professionals play a vital role in handling IPOs, ensuring regulatory compliance, and managing investor relations. Without a merchant banker, a company cannot navigate the complex listing process.