As part of efforts to attract more retail investors to the stock market, regulator SEBI is considering making applications forms simpler and shorter for public offers, including IPOs. Concerned over the lukewarm and ever-falling retail response to the primary market, SEBI is mulling over ways to win over small investors in this segment and one of the steps under consideration is a simpler investment process.
According to sources, the application forms currently being used for bidding in initial and follow-on public offers are unnecessarily long and ask the investors to fill in some details that can be done away with. Besides, these forms run into 15-20 pages in most cases, although there are only 2-3 pages where particulars need to be filled in by the investors and the rest of the pages contain instructions, information about the company and the issue and details about bankers, registrars and bidding centres.
The various proposals currently being discussed by SEBI”s Primary Market Advisory Committee include removing from these forms the details already available in the investors” demat and bank accounts. These include the name of the investor”s father or husband (depending on whether the investor is male or female), addresses, fax number and other contact details.
The move could cut down the columns needed to be filled by almost half, sources said. Besides regulation and development of the primary market, this committee also advises SEBI on changes required to make the systems and procedures simpler and transparent.
To make the forms shorter and simpler, the committee is also considering dividing them into two parts — one comprising the particulars needed to be filled in and the other with the details of the issue. Sources said that a proposal is also underway to make it mandatory in all public offers to give the investors the option to bid online, possibly through the stock exchanges themselves, where the forms could be much simpler and shorter.
SEBI has already asked the bourses to make a simpler form available online for IPO bidding through the ASBA (Applications Supported by Blocked Amount) process. Under ASBA, bid money remains in the investor”s bank account during the bidding process and get released after share allotment.
However, not all investors are required to bid through ASBA. Besides, this facility is not available for all issues and with all banks. Some changes can be expected on this front also, as SEBI is looking to expand the ASBA service further.
The primary market used to be retail investors” favourite investment avenue and an entry point for many of them till a few years ago, but their interest has been dwindling of late. This was reflected even in the recent offers from some public-sector firms, which have traditionally enjoyed a sound and safe investment image among public investors.
Sources said the government has also been asking SEBI to revive public investors” interest in primary market.