SEBI (Securities and Exchange Board of India) classifies merchant bankers into four categories based on the services they are authorized to provide. Category I merchant bankers can act as issue managers and provide underwriting, advisory, and portfolio management services, making them the most comprehensive service providers. Category II merchant bankers are authorized to act as advisers, consultants, and underwriters but cannot manage public issues on their own. Category III merchant bankers are limited to acting as underwriters only. Finally, Category IV merchant bankers can perform advisory functions but are not permitted to undertake any public issue management, underwriting, or portfolio management activities. These classifications ensure a clear regulatory framework, distinguishing the scope of operations for each category and ensuring transparency and accountability in their roles within the financial markets.