In order to expedite the clearance of IPO applications, Securities and Exchange Board of India (Sebi) is considering to put in place a time-frame within which the firms will have to respond to queries by the market regulator.
"We are going to make it obligatory that response to Sebi's queries has to be given in a particular time-frame and if it is not given, the case will be closed," Sebi Chairman UK Sinha said at a CII event here.
Refuting the criticism that Sebi takes longer time to clear the IPO applications, Sinha said, "But we also found that if the market is not good, if you want to delay the thing, you don't respond to Sebi's queries. We are going to change the rules of the game."
The merchant bankers, he further said, would have to do the due diligence in time.
According to the norms, a company has to come out with its public issue within 90 days of its prospectus being approved by Sebi. If it fails, the approval lapses and the company has to restart the entire process.
The Sebi is also going for a complete overhaul of the primary market norms and review the entire IPO process for which it has set up a group.
"Our idea is to make fund raising by corporates in India more efficient both by way of time and by way of costs. But let me also alert you that in the process there will be some additional obligations on the intermediaries," he said.
To help investors make informed judgement, Sebi has already asked merchant bankers (issue managers) to reduce the size of the application form for IPOs and disclose their track record of the issues managed and their performance.
"We are thinking of what kind of penalty can be imposed if there are any irregularities. We are looking at the volatility at the first day of trading, we are seriously working on that,' he added.