Skip to main content

SEBI asks banks to compensate retail investors if they fail to allot shares in an IPO

By
SEBI asks banks to compensate retail investors if they fail to allot shares in an IPO
Markets regulator Sebi today said retail investors applying for shares in IPOs would need to be compensated if bankers fail to make the allotment despite their eligibility.Besides, the public issue banker would need to pay an interest amount of 15 per cent to the investors for failing to resolve the grievance within 15 days, while they may also face Sebi's action for such failures.
Putting in place a framework to compensate retail investors who fail to get securities in an IPO, Sebi said there should be a uniform policy for calculation of minimum compensation payable to investors.While calculating minimum compensation, several factors need to be taken into account like opportunity loss suffered by the investor due to non-allotment of shares; number of times the issue was oversubscribed in the relevant category; probability of allotment; and listing gains if any on the day of listing.
"It is also proposed that in case of issues which are subscribed between 90-100 per cent -- that is non-oversubscribed issues --- the applicants would be compensated for all the shares which they would have been allotted," Sebi noted.However, no compensation would be payable to the applicant in case the listing price is below the issue price, it said in a circular, which would come into force with immediate effect.
While the process of Applications Supported By Block Amount (ASBA) has resulted in almost complete elimination of complaints pertaining to refunds, Sebi said there have been instances where the applicants in an IPO have failed to get allotment of specified securities and in the process have suffered an opportunity loss due to failure on part of bankers to process the applications even when they have been submitted within time.
Other factors are -- failure on part of the Self Certified Syndicate Banks (SCSBs) to make bids in the concerned exchange system even after the amount has been blocked in the investorsâ€[TM] bank account and any other failures on part of an SCSB which has resulted in the rejection of the application form.
"Any applicant whose application has not been considered for allotment, due to failure on the part of the SCSB, shall have the option to seek redressal of the same within three months of the listing date with the concerned SCSB."On receipt of such application, the SCSB would be required to resolve the same within 15 days, failing which it would have to pay interest at the rate of 15 per cent per annum for any delay beyond the said period of 15 days.," Sebi noted.
In case bankers fail to redress such grievances within the stipulated time, additionally "Sebi may initiate action as deemed fit".The regulator has asked bankers to resolve all pending issues related to non-allotment of specified securities whether on the the regulator's complaint redressal system -- SCORES portal -- or otherwise.

The Economic Times, New Delhi, 19th February 2018

Comments

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more