Sebi approves marking lien on bank account

This move is intended to enable the application money to remain in the bank account of the applicant till such time the allotment is finalized and thus eliminating the refund process.

The ultimate aim is to basically introduce a shorter time-frame between the closure of an IPO for subscription and its listing.

 

Some of the recent mega IPOs which had received an overwhelming response had
wiped out a lot of money from the market and not only that even now the entire refund has not taken place.Even in the case of ONGC which was floated couple of years back till now refunds of application money has not fully happened.

However, initially both the options will be available to the investors along with the new option, as all the banks are not presently fully equipped for this change.To begin with sources said 3-4 large banks and their branches will roll out this option as they put in place the funds that would be required.

Going forward for wider coverage into the interiors more banks and their branches as they become fully ready with the funds will also be able to participate.

"Its a difficult move,however for smaller issues its fair enough but for larger ones in terms of the number of applications received one has to see how it things will eventually pan out. As we had received about 50 lakh application form
in the Reliance Power IPO,"said  a senior investment banker with one of the top domestic investment bank.

The Sebi board has also decided to enhance the minimum net worth requirment for registration as portfolio manager from the existing Rs 50 lakh to Rs 2 crore.The existing portfolio managers, whose networth is less than Rs.2 crore will have to increase it to at least Rs.1 crore within a period of six months and thereafter to the prescribed networth of Rs. 2 crore in the next six months.