SEBI planning new mechanism

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Mumbai, June 13 (UNI) The Securities and Exchange Board of India (SEBI) is trying to introduce a new mechanism by which the banking system will be less burdened at the time of Initial Public offering (IPO) and at the same time investors' money would not be blocked for a long period.

This was revealed by C B Bhave, Chairman of SEBI, while delivering the Shankarrao Chavan memorial lecture, organised by the Indian Institute of Public Management and Shankarrao Chavan Memorial Trust at Mantralaya here today.

Bhave said when an IPO comes into the market with a share issue, large number of small investors deposit cheques with applications.

This money is collected and after the allotment a large part of it is refunded.

With a view to avoid the unnecessary huge transaction burdening the clearing system with large amount of cheques, the SEBI is testing the new mechanism.

Within two months, banks at some branches will hold a particular amount of IPO applicants in their own accounts till the allotment is finalised and take away the required amount from that account after the allotment, Bhave said.

SEBI will evaluate the response to the scheme and then implement it on a large scale, he said.

Bhave said SEBI proposes to introduce future trading in Foreign exchange over a period of next three to four months.

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