U.K. Sinha in New Delhi on Tuesday. Picture by Ramakant Kushwaha
New Delhi, Sept. 18: Sebi chairman U.K. Sinha today said the capital markets regulator would soon take more steps to revive the domestic investor sentiment.
Sinha’s statement comes a day after finance minister P. Chidambaram assured investors that the Securities and Exchange Board of India (Sebi) would finalise more steps to boost growth and encourage flow of household savings into mutual funds.
“Mutual fund inflows into the market have been quite modest. Primary markets have also not seen much interest. Sebi will make all efforts to revive domestic sentiments,” Sinha said at an industry event.
He added that Sebi would take steps to bring depth in the securities market and encourage more retail investors.
Sebi’s board is expected to meet later this month where a slew of measures to revive the capital markets are expected to be announced.
Sources said one of the key issues that could come up at the board meeting later this month was the proposal to create a safety net for small retail investors.
At its meeting last month, the market regulator had deferred a decision on the proposal as certain sections of the market opposed the idea. Sinha had then said that it would take a final view after consultations with various market participants.
Under the plan, if a retail investor suffers a loss with the share price of the IPO falling after listing, he could be compensated to some extent by the company. It is expected that Sebi will place some conditions that include stipulating the period, the percentage of the drop in share value or minimum number of shares that a retail investor must bid.
The source, however, added that the market regulator had not fixed a final date for the meeting.
It is believed that the market regulator may also take a step towards faster listing by shortening the bidding period for an IPO to five days from the present limit of 10 days. It could also bring down the gap between the closure of a maiden offer and listing to five days from 12 days at present. Sebi is also reportedly looking to make application supported by blocked amount (Asba) mandatory for retail investors.
Sinha said that amendments in Sebi regulations would be made to implement from October 1 some earlier decisions taken by its board such as fungibility and exit loads of mutual funds.