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There would be more efficiency in the listing process, if the time taken for processing an IPO application can be reduced
In a bid to bring in more efficiency in the primary market, market regulator Securities and Exchange Board of India (SEBI) on Wednesday said that it wants to bring down the time required for initial public offer (IPO) processing to seven days from 20 days at present over the next one year, reports PTI.
This would mean that the time taken for processing an application for an IPO will be lesser, which will bring in more efficiency to the listing process.
"The listing time should come down from 20 days to seven days. The primary market is somewhat inefficient compared to the secondary market," SEBI chairman CB Bhave said at a conference in Mumbai.
However, while doing so, the timely settlement of transactions will become the biggest bottleneck to the system, which needs to be addressed, Mr Bhave said.
SEBI has requested the Reserve Bank of India (RBI) to allow clearing entities to have an account with the central bank, Mr Bhave said.
With a view to bring in more transparency, SEBI had introduced Application Supported by Blocked Amount (ASBA) process in the IPO process and is looking at making it applicable to retail investors as well, Mr Bhave said.
The ASBA allows releasing an applicant's money only if the allocation is made. If ASBA process becomes popular, SEBI would like to reduce the IPO allotment period to five days, Mr Bhave had said earlier.
Earlier in August, the market regulator had issued a circular that said that changes in sections like any material development in risk factors, an aggregate increase of 5% or more of the shareholding of promoters, change of more than 10% in the estimated issue size or estimated means of finance, change of more than 10% in estimated deployment of funds, among others, as reasons required for fresh filing of draft offer document with the board. According to media reports, some merchant bankers felt that the directives from SEBI related to updations in the offer documents for initial public offerings, would make the process as tedious as filing a fresh offer document.
The move came after SEBI observed that in some cases material changes informed by merchant bankers resulted in major deviations from the draft offer document that was available in the public domain and called for fresh scrutiny and processing of the draft offer document by the SEBI board.
At present, it takes around two weeks for allocation of public issues and around three weeks for them to be listed after they close.
-Yogesh Sapkale [email protected]
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