The move comes close on the heels of a nationwide crackdown initiated by the markets regulator on underwriters.
Sebi recently slapped several showcause notices to errant underwriters in the cases of Pittie Cements and Girnar Fibres, since they went back on their commitments.
Sebi's primary markets department is also examining a report prepared by its official Smita Sharma, which has identified about 25 areas which need to be tightened.
Officials said the report would be taken up by Sebi higher levels at a later stage.
Officials say the first and most important step would be to work on the underwriting agreement, and recast it in a way that underwriters cannot back out once they are committed to a public issue.
Among the most common excuses underwriters cite while backing out is that the company did not provide them the requisite number of application forms and prospectuses, forcing them to get a only few applications.
``But this argument is untenable since the underwriters can easily back out on this ground well before the issue. Why do they wait till the issue has devolved?'' a Sebi official asked. He said this aspect was being looked into as part of the review.
Underwriters also claim that since the issue closed on the earliest closing date, it could not have devolved.
This, Sebi feels, may be a valid point, but promoters often say that there have been cases where the cheques may have come in for 90 per cent or over by the earliest closing, but the cheques either bounced or the applications were found invalid.
This again brings the subscription level back to under 90 per cent, and the issue devolves.
Officials seem to feel that the only option left to bring errant underwriters to book would beto set an example and send out a strong signal by forcing some of them out of the market. Towards that end, the regulator recently shot off a series of showcause notices to underwriters who refused to pay up in the Pittie and Girnar issues. According to officials, following the tough stance, some underwriters of the Girnar Fibres issue in Calcutta have begun paying up.
However, owing to some technicalities, Calcutta Stock Exchange is understood to have held back the release of the money paid by the underwriters. Sebi is now looking into this, and is expected to take up the matter with CSE authorities.
While the market regulator issued 52 notices to the underwriters of Girnar Fibres, 30 notices went out to those in the Pittie Cements' issue. Underwriters in about 10 more issues are in the Sebi firing line.
