Investment bankers are urging for a dilution of the new merchant banking regulations proposed by the Securities and Exchange Board of India (Sebi).

The proposed changes, outlined in a consultation paper released on August 28, aim to prevent conflicts of interest and promote fairness in the capital markets.

One notable proposal is to restrict merchant bankers from accepting mandates from companies where their directors or relatives hold shares valued at Rs 10 lakh or 0.1 percent of the company, whichever is lower.

Bankers have expressed concerns about the broad definition of "relatives" as per the Income Tax Act, arguing that it encompasses a wide range of connections that could impede their operations.