To make it easier for investors to enter the stock market through public issues, the Securities and Exchange Board of India, or Sebi, is considering making application forms for IPOs more simple and short. It is also considering a common IPO 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 the allotment of shares and not at the time of bidding. The matter was discussed at Sebi's board meeting earlier this month, a senior official said. Sebi is of the view that the forms used for bidding in IPOs are unnecessarily lengthy, as they ask investors to furnish many details that can be done away with. 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 names of the investor's father or husband, addresses, fax numbers and other contact details.
The move could cut down by almost half the columns that need to be filled up, sources said. Sebi hopes simplified and shortened IPO forms will help win 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 was the retail investors' favourite investment avenue and an entry point for many of them till a few years ago, but their interest has been dwindling lately. 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 the primary market. There is also a proposal to make online option mandatory in all public offers. Sebi has already asked the bourses to provide a simpler form available online for bidding in IPOs through ASBA. For non-retail investors, it has been made mandatory to use ASBA, and more steps are expected to popularise this tool. The facility is optional for retail investors.
