IPO pricing to be made transparent

To address the problem of multiple demat accounts, the finance ministry, along with the Securities and Exchange Board of India, is mulling measures to make initial public offers more transparent.

"The recent multiple demat account scam has brought out the fact that investors are resorting to this practice since there is a premium to be earned. We are examining the present system to see if the premium factor can be addressed by making the pricing of IPOs more transparent," an official said.

Officials said the role of merchant bankers was also being examined since the entire book-building process is being handled by them.

"Prior to the economic liberalisation, prices were determined by the government. Now they are largely determined by merchant bankers. The prices of shares should be more transparent and market-determined," an official said adding that the new measures could be announced later this year.

After the Yes bank IPO scam broke out, Sebi directed that software used by depository participants be changed to track multiple demat accounts.

Opening multiple demat accounts is not illegal. Even after the scam, depositories found out that in many cases, account holders had all the requisite papers.

There is now demand for tightening depository norms to ensure that fake and benami accounts, that could be used for filing multiple applications, are not opened.