The Securities and Exchange Board of India (SEBI) on Monday doubled the investment limit for retail investors in initial public offers (IPOs) to Rs 2 lakh.
C B Bhave, chairman of SEBI told reporters in Mumbai that the SEBI board had allowed retail investors to buy shares worth up to Rs 2 lakh through IPOs.
Earlier, the market regulator had, through a discussion paper issued in August this year, proposed to raise the ceiling for retail investors to Rs 2 lakh in public issues.
In the discussion paper SEBI had argued that “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 Rs-1 lakh.”
The discussion paper also contended that since 35 per cent of the public issue is to be allocated to retail investors, in case of large public issues – with issue size in the range of Rs 4,000-6,000 crore -- the limit of Rs 1 lakh would mean that the issue has to receive a minimum of 150,000 to 200,000 applications from retail category.
Prior to 2005, retail investors could apply for shares only up to Rs 50,000. Later, it was increased to Rs 1 lakh in March 2005.
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