Sebi proposes to double retail investment limit to Rs 2 lakh

Market regulator Sebi today proposed to double the investment limit for retail investors to Rs 2 lakh in public issues, a move that will enable individuals to aggressively participate in primary issues of companies.

"It is proposed to ... Enhance the limit prescribed for defining a retail individual investor in a public issue from the existing Rs 1 lakh to Rs 2 lakh," the Securities and Exchange Board of India (Sebi) said in a draft regulation on which it invited comments from stakeholders by September 3.

The current limit of Rs 1 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 per cent in 2005 to around 12 per cent 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 Rs one 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.