Retail investors will get to double their bets on initial public offerings as the market regulator raised the limit to Rs 2 lakh, the first revision in five years, as it attempts to keep pace with the eroding value of the rupee.
This will cut the numerous applications investors sometimes make in the name of relatives to get more shares.
Some say the hike will enrich the wealthy more than the middle class if it is done without an increase in the overall allocation for the retail segment, which is capped at 35%.
Unlike most developed markets where investment bankers have the discretion to allot shares to their favoured clients in an IPO, the Indian regulator has mandated specified portions that go to funds, wealthy individuals and retail investors.
Nearly 75% of the retail applications in recent public offerings were for value between Rs 80,000-1,00,000, said a SEBI study. In the non-institutional category, the number of applications below Rs 5 lakh was negligible.
The portions reserved for wealthy individuals and corporate treasuries have been consistently oversubscribed by 20-25 times as they borrow heavily to benefit from pop-up listing, while in the retail category that depends on savings, it was 3-5 times.
"SEBI has also deferred a decision on overhauling the country's corporate takeover norms as it needs more time to study the proposals of a panel. SEBI may discuss the proposals in the next board meeting," SEBI chief C B Bhave said.
In July, A SEBI panel had proposed changes to takeover rules that are likely to offer better terms to minority shareholders , but could cut down the number of deals in the near term.
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