Sebi makes IPOs cheque-free; halves listing time to six days

In a major revamp of IPO norms, markets regulator Sebi today made public offer investments cheque-free and also cut down the time taken for listing of companies by half to six days.
While lowering the IPO costs for the companies and investors, Sebi also allowed a larger number of companies to tap the 'fast-track' route for raising funds from markets from the existing and new investors.
Currently, it takes 12 days after the close of bidding in the Initial Public Offer (IPO) for a company to list on the stock exchanges, thus keeping the investors' funds locked in for a longer period of time.

The shorter time period, which would come into effect from January 1, 2016, would also help reduce the costs associated with the public offering, Sebi Chairman U K Sinha said after a meeting of the regulator's board.
However, investors will have to wait for making the IPO process entirely online in terms of submission of their bids.
While Sebi has provided for online submission of bids from terminals of market entities, the same from any computer or mobile will take some time. Sinha said the full-fledged e-IPO would be introduced in due course.

The Sebi board also decided to allow a larger number of companies to raise funds through 'fast-track' process. A company with public shareholding worth Rs 1,000 crore can raise funds through FPOs under fast-track mode, down from Rs 3,000 crore requirement earlier.

For rights issues, the fast-track route can be availed by companies with public shareholding worth as low as Rs 250 crore.
Sebi also said that said that ASBA (Application Supported by Blocked Amount), which refers to an application mechanism for subscribing to IPO with the bid amount blocked in a bank account rather than that being debited, will be applicable to all kinds of investor category and all IPOs.
The regulator said that the latest streamlining of the public issue would "obviate the need to issue cheques", increase reach of retail investors to access the IPO and reduce the cost of public issues.

"With this issuers will have faster access to the capital raised and investors will have early liquidity," Sinha said.