Sebi Plans To Bring Down Allotment Time To 15 Days

The Securities and Exchange Board of India (Sebi) is planning to bring down the allotment period for all public issues to 15 days from the existing stipulation of completing the procedure in 30 days. According to sources, the matter would be taken up by the Sebi board when it meets next in the first week of May.

The capital market watchdog has already invited comments from leading intermediaries on the issue.

The move is seen as a strong step by the regulator to ensure quicker allotment of shares. According to sources at Bombay Stock Exchange (BSE), the bourse has already made a recommendation to the regulator to bring down the time required for allotment procedure to 15 days.

Sources said that the issue was discussed at a recent meeting between senior Sebi officials and the Association of Merchant Bankers of India (Ambi).

At the meeting, Sebi chairman D R Mehta is reported to have said that investor confidence will be enhanced if the allotment procedure in a public issue is completed within 15 days.

According to P Chandrasekhar, vice chairman, Ambi, merchant bankers have welcomed the move.

"It will be excellent if they succeed in bringing down the allotment period. A representation will soon be made to the regulator on behalf of Ambi in this case. However, instead of bringing it down drastically to 15 days, the procedure can be initially completed in three weeks. It can then be brought down further gradually after understanding the market reaction to this move," he said. Merchant bankers also expressed concern about the archaic banking system prevailing in the capital market.

Another merchant banker felt that there can be a threshold limit imposed on the time period required for allotment.

He says, "There is a need to link the allotment period to the size of the issue.

In case of oversubscribed issues and big issues, there can be a relaxed time-frame of three to four weeks for allotment. For the rest, it can remain 15 days. The banking system at the moment is not equipped to handle the pressure."