SEBI to introduce new payment system for IPOs

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New Delhi, Aug 5 (UNI) In an investor-friendly measure, Securities and Exchange Board of India (SEBI) Chairman C B Bhave today announced that a new payment system for Initial Public Offers (IPOs) aimed at not blocking investors' money till shares are actually allotted was in the offing.

The scheme will be launched on a pilot basis this month Mr Bhave told reporters here on the sidelines of a function.

"Hopefully by the end of August, we will start the pilot project," Mr Bhave said.

Initially, both the existing system of payment for public issues and the new system will co-exist. After which, there could be migration to the new system, he said.

"We really do not know how the system works. We need to get used to it," he said.

Mr Bhave said glitches at the beginning would need to be sorted out. Investors money often gets blocked for months without yielding any interest to them in the event of their applying for an IPO. The beneficiary is the alloting company and the loser is the applicant.

Experts say the step will help strengthen the primary market.

UNI GS SG BST1631

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