Decisions by SEBI about IPO & MF on 16th August 2012

SEBI, the Regulatory authority of security Market in India comes with the new reform policies on IPO and Mf industry. Due to bad market condition investors’ confidence is very low towards the investment in shares as the risk factor is highly increased. Investors interest become less towards the IPO as many times small investors had  gotten no share.

So taking care of these issues, SEBI has taken the following decisions to increase the confidence and interest of investors.

Some of the major decisions approved by SEBI about the IPO are as follows:-

  •      Increasing the minimum application amount Rs. 10,000- 15,000 from Rs. 5,000-7,000
  •      E-IPO Procedure for electronic bidding in public offers.
  •     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.
  •     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.

Some of the major decisions approved by SEBI about the Mutual Fund are as follows:

  • Expense ratio will be increased by 0.2%
  • Flexibility is allowed in the total expense ratio for mutual funds.
  •  MFs can accept cash for applications up to Rs.20,000.
  •   Now the service tax will be paid by investors
  •   0.3% commission will be paid in small towns