Tuesday 13 May 2008

SEBI Eases IPO Process: Refund Process Eliminated: Money to remain in Bank till Allocation

In a big respite to the IPO applicants, the SEBI or Securities and Exchange Board of India has eased out the process of money transfer and eliminated the refund process completely.


In the new setup, the applicant who is applying for the IPO, will not have to send the money to the registrar of the IPO. Instead, the money will remain in his bank account, but in a locked state. Once the allocation is complete, the required amount of money will be transferred to the Registrar of the IPO and the balance money will be set free from the locked state.

This will completely eliminate the process of refund.. As I’ve explained in this article, Should you invest in IPO’s, now the calculations for interest rate earnings will have to re-worked. It is not clear whether the locked money will be eligible to earn any interest or not, but atleast there will be no problems with the delayed refunds, the postal delays in case of paper cheques and other reasons given by registrars for delaying the refund payment. Not only that, it will also save a lot on Postal charges & costs.

Let’s hope to see more such investor friendly and cost efficient developments from the market regulators. Table of Contents

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