SEBI, the Regulatory authority of securities Market in India comes with the new reform policies on IPO and MF industry. Due to bad market condition investors’ confidence becomes very low towards the investment in shares as the risk factor is highly increased.So, to increase the interest and confidence of investors, SEBI has taken the following decisions:
- Increasing the minimum application amount Rs. 10,000- 15,000 from Rs. 5,000-7,000
(For guaranteed allotment to the retail investors.)
- E-IPO Procedure for electronic bidding in public offers.
(To simplify the application procedure)
- Investors can apply for IPOs/FPOs online by using credit and debit card.
- Tightening guidelines for IPO-bound companies that do not have track record of profit.
(To protect the interest of investors)
- Companies with minimum profit of Rs. 15 cr could only issue the IPO.
- SEBI will allow rights, bonus issues by Cos to cut promoter stake to 75%.
- ASBA is not mandatory for IPO investors but the investors who will apply through the e-IPO scheme, have to go through the ASBA.
(ASBA is an arrangement where funds remain in a retail applicant’s bank account till share are allotted to him in a public offer. Interest will be given to investors)
- Now, IPO can be issued through the secondary market.
Some of the major decisions approved by SEBI on the Mutual Fund and its impact on the industry and investors are as follows:
- Expense ratio will be increased by 0.2%
- Flexibility is allowed in the total expense ratio for mutual funds.
(This decision is taken to give the flexibility to mutual fund companies for taking the decision with respect to their expenses and now companies can give more commission to agents)
- MFs can accept cash for applications up to Rs.20,000.
(This scheme will help those who do not have any bank account and now they can take the Mutual Funds scheme)
- Now the service tax will be paid by investors
(It will be good for the mutual fund companies but It will increase the expense of investors)
- 0.3% commission will be paid in small towns
(To encourage the Mutual fund schemes in small towns)