SEBI proposes to double retail investment limit to Rs2 lakh
Moneylife Digital Team 18 August 2010

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) today proposed to double the investment limit for retail investors to Rs2 lakh in public issues, a move that will enable individuals to aggressively participate in primary issues of companies, reports PTI.

"It is proposed to ... enhance the limit prescribed for defining a retail individual investor in a public issue from the existing Rs1 lakh to Rs2 lakh," SEBI said in a draft regulation on which it invited comments from stakeholders by 3rd September.

The current limit of Rs1 lakh for retail investors was fixed over five years ago in March, 2005.

Giving justification for its proposal, SEBI said the limit for retail investors needed to be enhanced in view of the increase in inflation rate from 4% in 2005 to around 12% currently and rise in the BSE Sensex from 8,000 points to about 18,000 points during the same period.

"This means that the retail individual investors now buy a lesser number of securities with Rs1 lakh than they would buy with the same amount in 2005," it added.

"It is a very timely and logical step. The lukewarm public response to some recent offers may also have made SEBI put the proposal," SMC Capitals equity head Jagannadham Thunuguntla said.

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