As part of its efforts to make it easier for investors to enter the stock market through public issues, Sebi is considering making application forms simpler and shorter for the IPOs. The market regulator is also considering a common IPO application form for both ASBA and non-ASBA investors.
Under the ASBA (Application Supported by Blocked Amount) facility, money gets debited from the investor’s account only after allotment of shares and not at the time of bidding.
The matter is being actively considered for expeditious implementation by Sebi and was discussed at its board meeting earlier this month, a senior official said.
Sebi is of the view that the forms used for bidding in IPOs are unnecessarily long, as they ask investors to furnish many such details that could be done away with.
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 investors and the remaining pages contain instructions, information about the company and the IPO and details about bankers, registrars and bidding centres.
Sebi’s Primary Market Advisory Committee is considering a proposal to remove details already available in investors’ demat and bank accounts from the IPO forms. These include name of the investor’s father or husband, addresses, fax number and other contact details.
The move could cut down the columns needed to be filled by almost half, sources said.
Sebi expects simplified and shortened IPO forms to help in winning over small investors to public offers through a simple investment process, and also counter the lukewarm and ever-falling retail response to the primary market.
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.
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 provide a simpler form available online for bidding in IPOs through ASBA.
It has been made mandatory for non-retail investors to use ASBA and more steps are expected to popularise this tool. The facility is currently optional for retail investors.
As per Sebi estimates, ever since the introduction of ASBA facility in July 2008, investors have gained over Rs 63 crore in terms of interest earnings.