Pay retail investors for failure in IPO allotment: Sebi tells bankers

Sebi has issued a formula for compensation, which takes into consideration the difference between the issue price and the listing price

Investment bankers handling initial public offerings (IPOs) will have to compensate retail investors —those investing up to Rs 200,000—if they fail to get an allotment due to mishandling. In a circular released on Thursday, the market regulator directed banks to provide compensation to investors if any failure on their part results in non-allotment of shares to retail applicants.

“…there have been instances where the applicants in an IPO have failed to get allotment and in the process may have suffered an opportunity loss,” Sebi said in a circular.

The regulator said there have been several instances where an investor has