On Wednesday, the market watchdog Sebi reduced the timeline for refunding investors' funds in case of not obtaining minimum subscription as well as in a case when the issuer fails to obtain listing or trading approval from the exchanges.
And the decision has been taken after factoring that ASBA or Application Supported by Blocked Amount has been made mandatory for all public issue applicants. In the process, the application money for public issue gets only blocked and is not transferred and only as and when the shares are allotted, the money gets debited. And if there is no allotment or partial allotment then money gets unblocked.
Moreover, after the introduction of UPI mode for applying for IPOs, the onus of compensating investors is with the intermediaries in case there is any delay in unblocking of funds in the ASBA accounts beyond 4 working days from the issue closing date, said SEBI in a release. "Based on various consultations with the market participants, it has been decided to reduce the timelines for refund of the money to the investors... to four days," Sebi said.
In the current scenario, the issuer is compulsorily required to refund applicants' money in case of non receipt of minimum subscription within 15 days from the issue closure date. And in a case if the issuer does not obtains listing or trading approval, it was to refund the money within 7 days of obtaining intimation on rejection from the exchanges. Now these timeline has been reduced to 4 days.