Public issue payment norms may be eased from July: SEBI chairman C B Bhave

SEBI chairman C B Bhave, who took over from M Damodaran in February this year, is confident that SEBI's latest order that enables applicants to pay only on allotment of public issues such as IPOs and rights issues (See: SEBI eases IPO payment norms for investors) can be made operational by July this year.

Talking to business channel CNBC-TV18, Bhave said this was an in-principal approval and the first step. "We have had a few rounds of discussions with banks, merchant bankers, stock exchanges, and all concerned players. We have a fair bit of confidence that the system can be made operational by the first week of July." Sebi has allowed lien on investors' bank accounts for IPO application.

Bhave also said that SEBI  would make it operational on an optional basis probably from a few branches that the respective banks identify. "Then, depending on how this system settles down, we will take further steps."

Shortly after assuming charge as SEBI chairman C B Bhave had said at an Ernst & Young seminar that there was no reason why an investor's money should leave his bank account when he was not assured about allotment of shares. (See: SEBI may allow investors to retain IPO subscription till allotment) 

The new system, part of SEBI's attempts at wider primary market reforms, is aimed at reducing the time taken for refunding money to shareholders who have paid at the time of applying for the shares. SEBI was also keen to reduce the time between sale and listing of shares by allowing investors to hold subscription amounts for initial public offers (IPO) in their bank accounts until the shares are allotted to them.

"This is part of our effort to reduce the time between the public issue and listing as well as to make sure that investors don't face difficulties in this entire process. Hence, the board has decided that we first focus on the refund process which is the outcome of today's meeting. Simultaneously, we would be working on the issue of why does it take 21 days. As and when we are ready with the concepts on that, we would come out and share it with all stakeholders."