Registration of Underwriters with SEBI


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  • End to end legal support

Registration of Underwriters with SEBI

Who are underwriters under SEBI act?

An underwriter is any entity or a corporate that evaluates and assumes another entity's risk for a fee, such as a commission, premium, spread or interest. Underwriters operate in many aspects of the financial scenario, including the mortgage industry, insurance industry, equity markets, and common types of debt securities.

They are the risk experts having that appetite to borne the same for a premium offered. Most common type of Underwriters is Mortgage Loan Underwriter.

In today's scenario, it is very much important to underwrite loans so as to ensure risk-free modeling. It is sorts of discipline in itself.

It is very much prevalent in the following financial sectors:

Underwriting in Insurance

In the insurance segment, underwriters determine whether an insurance agency should undertake the risk of insuring a client. They determine the risk and exposure of clients and also how much insurance should be granted to a client, what they should pay for it and whether or not to offer an insurance policy to the client in the first instance.

Underwriting in Stock Market

In the Equity or stock market, underwriting involves determining the risk and price of a particular security. It is a process seen commonly during initial public offerings, wherein investment banks first buy or underwrite the securities of the issuing entity and then sell them in the market. This ensures that the issuers of the security can raise the full amount of capital while earning the underwriters a premium in return for the service.

Investors earn a lot from the underwriting process as the information provided by an underwriting agency can help them take a more informed buying decision. An underwriter who holds a large chunk of the securities of a particular company or is the market maker for such a security provides the core liquidity for the security and enhances price stability and distribution channels.

Underwriting in Banking

Underwriters in the banking sector perform the critical operation of appraising the credit worthiness& soundness of a potential customer and whether or not to offer them a loan. They appraise the credit history of the customer through their past financial record, statements, and value of collaterals provided, among other parameters& then take on informed decision as to whether they are eligible for the loan amount or not.

EXAMPLES: Bajaj Allianz General Insurance Company Ltd., IDBI, IFCI etc.

*Getting a license under Underwriting involves an application to SEBI under Securities Exchange Board of India (Underwriters) Regulations, 1993.



An application by an underwriter for grant of a certificate shall be made in Form A accompanied by non-refundable fees.
However, the Board may require the underwriter to submit further information in order to consider the application. It may take the following things as criteria for consideration of the application.

Henceforth, Board on being satisfied by the eligibility of the application, shall send an intimation to applicant & then Grant a Certificate of Registration or a license to Act as an Underwriter in Form B.

*Certificate shall be valid for a period of 5 years.

Conditions for Registration

Significant Points


*Also underwriters shall make all the efforts to protect the interests of investors, as prescribed in Schedule III (Code of Conduct for Underwriters) of relevant regulations.

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