IPOs – Retail Investment Limit proposed to be doubled to Rs 2 lakh

by khalid on 20/08/2010 · 0 comments

Market regulator SEBI issued a discussion paper regarding its proposal to double the limit of Retail Investment and it invited comments from stakeholders by September 3. At present the limit for Retail Investors is Rs 1 lakh which revised in the year 2005. Before 2005 it was Rs 50000 for Retail Investors.

In the discussion paper, SEBI felt that the aforesaid limit of Rs 1 lakh defining a Retail Investors need to be enhanced as in the recent public offerings approximately 75% of the applications in the retail individual segment were in the size of Rs 80,000 to Rs 1 lakh. Whereas, in the Non Institutional Investor
category, the number of applications in the size of less than Rs 5 lakh was negligible. The Retail Individual Investors who have the capacity and appetite to apply for securities worth above Rs 1 lakh were constrained from doing so because of the current limit. They could neither make an application under the Non Institutional Investor category because the allocation there was limited to 15 per cent as against 35 per cent for Retail Individual Investor category.

Giving justification for its proposal, SEBI said the limit for retail investors needed to be enhanced in view of the increase in inflation rate from 4 per cent in 2005 to around 12 per cent now and rise in the BSE Sensex from 8000 to about 18000 during the same period.

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