SEBI to reform IPO process

Capital markets regulator SEBI said today that it will reform the initial public offer (IPO) process and ensure that disclosure norms are made effective as the Indian financial markets undergo radical reforms to become globally competitive.

“We are looking at every aspect. The basic aim is to curb volatility, particularly on the day of listing,” said Rajeev Agarwal, whole-time member of the Securities and Exchange Board of India (SEBI) while addressing an ASSOCHAM conference.

“We will follow strict disclosure norms to protect investors’ interests, create enabling environment so that financial firms become global and vigorously enforce corporate governance norms.”

He said the industry should make efforts to channelise more savings into capital markets to fund capital requirements of various sectors. Only 4.6 per cent of national savings are invested in capital markets.

The country needs investments of one trillion dollars to build infrastructure in the next five years. Agarwal said even pension funds can be invested as new products evolve and regulations are harmonised so that GDP growth of nine per cent can be maintained, the industrial body said in a statement.

Meanwhile, CS Mohapatra, director (secondary markets and UTI) at the finance ministry’s Department of Economic Affairs, said the government will remove regulatory overlaps to bring financial stability and take measures to boost corporate bond market.

However, industry leaders must take lead in reducing intermediation costs by introducing new technology and improving human infrastructure. “There is no reason to be pessimistic as India is showing second highest growth rates amid global economic gloom. There is need for next generation of reforms to increase inflows from foreign institutional investors.”

Nanda Kumar, senior vice-president of the National Stock Exchange, said the current global uncertainties pose challenges and opportunities for the Indian financial sector. The industry requires innovation, efficiencies, transparency and safety to bring back investors’ confidence.

RN Dhoot, president elect of The Associated Chambers of Commerce and Industry of India (ASSOCHAM), said watershed structural reforms have taken place in the banking sector during 20 years of pro-active reforms.

“The time has come for consolidated efforts by all stakeholders for inclusive growth,” he said adding financial sector reforms can add significantly to economic growth and also make a significant contribution to the sustainability of this growth.

ASSOCHAM secretary general DS Rawat said the financial system’s ability to efficiently intermediate domestic and foreign capital into productive investment and to provide financial services to a vast majority of households will influence economic as well as social stability.

Rashesh Shah, chairman of ASSOCHAM National Council for Capital Markets, said Indian yearly savings total 500 billion dollars. The India growth story is in tact, he said, but four trends are worrisome. High inflation, rising interest rates, burgeoning fiscal deficit and the currency under pressure have led many to conclude that economic reforms are stuck for the moment.

Others present during the conference were Anil Agarwal, past president of ASSOCHAM, S.C. Agarwal, co-chairperson of ASSOCHAM National Council for Capital Markets, and Manish Kedia, director and head of debt practices at Resurgent India.