MUMBAI, Jan. 9 -- India's merchant banking industry may be headed for a sharp contraction as the market regulator's new, tougher regulatory framework threatens to push out a large number of players who have stayed on the rolls but barely participated in the Indian capital markets.

Of the 238 merchant bankers registered with the Securities and Exchange Board of India (Sebi) as of 5 January, only 113 did even a single issue in calendar year 2025 across all categories of offerings, including initial public offerings (IPOs), small and medium enterprises IPOs, debt issues, infrastructure investment trusts (InvITs) and real estate investment trusts (REITs). Of these active entities, about 70% handled only single-digit issues through the year, ...