News

SEBI presses pause button on IPOs until bidding system is corrected

SEBI presses pause button on IPOs until bidding system is corrected

The Securities and Exchange Board of India (SEBI) is believed to have put a temporary freeze on initial public offers (IPOs) as it reviews the public issue process amid concerns that the current framework allows applicants in the institutional and high net worth individuals categories to put in bids only to be rejected later due to lack of funds.

On Monday, the Association of Investment Bankers of India (AIBI), the industry body of merchant bankers, communicated to its members that the capital markets regulator has informed that no further IPOs will be allowed till the issue is "fixed and resolved"

According to the regulator, as per the AIBI communication, in some of the recent IPOs it was seen that bids in the non-institutional investors (NII) and qualified institutional buyers (QIB) mostly come on the last day (T) while the funds come on the next day (T+1) or even on the second day (T+2) in some cases.

However, many applications in these categories get rejected as funds are not blocked in the bank and the applications fall in the 'bidded but not banked' category.

Top