Chidambaram in New Delhi on Friday. (AFP)

New Delhi, Jan. 13: Finance minister P. Chidambaram today said “severe action” would be taken against those found guilty of abuses in the allotment of shares in the initial public offerings (IPOs) of Yes Bank and Infrastructure Development and Finance Company (IDFC).

“We’ll take the severest possible action,” Chidambaram said. The finance minister’s statement came after the Securities and Exchange Board of India (Sebi) called for a probe into the banks involved in the IPOs of Yes Bank and IDFC.

Chidambaram said cases of abuse in share allotments showed a “systemic deficiency” in the management of the offerings.

“It is the same set of players and four or five individuals. A couple of banks are also the same. The depository participants are the same. Therefore, the culprits are pretty much identified,” he said. “But now that we know who the culprits are ... I think all agencies, acting together, will take the severest action against them.”

Sebi had banned four investors from dealing in securities and 35 others from trading in future IPOs, accusing them of using false identities and bank accounts to secure more shares in the IDFC offering. The market regulator also found that some investors used fictitious names to buy more shares than they would have received otherwise.

Chidambaram said he had discussed the issue with Sebi chief M. Damodaran to ensure an end to such scams. Bank of Baroda and Andhra Bank are due to hit the market next week.

“There is a systemic deficiency, but as I said, I don't accept a system which doesn't detect multiple accounts,” he added.