From 70 days to 7, SEBI to fast-track IPO clearance
December 17, 2022
SEBI chief says new norms by March; asks investment banks to gear-up
SEBI chief Madhabi Puri Buch plans to cut down the time taken by the regulator in clearing IPO documents to just seven days from up to 70 days currently.
“It is my desire and we will soon reach a stage to say that in the Indian markets, capital raising documents are cleared in just seven days,” she said while addressing a packed gathering of investment bankers in Mumbai on Friday. Buch said her team was working on putting together the building blocks for cutting the red-tape involved in the filing of documents and regulatory clearance, and the results would be visible by March 2023.
“Delayed applications does not speak well of us and with the new framework, there will be complete transparency. Everybody will know who (SEBI or the investment bankers) is actually delaying it,” she said. Buch was the keynote speaker at a private function organised by the Association of Investment Bankers of India (AIBI).
Bankers present at the event told businessline that they had already received instructions from SEBI regarding the reduced timeframe.
“As far as I’m concerned, I would like to say that SEBI clears documents in seven days. For this, the ball is 80 per cent in your court (merchant bankers) and 20 per cent with SEBI. It is a challenge to the entire community (of investment bankers), of which I feel a part... lets do it. There will be process re-engineering and a new policy. When there are delays on account of the bankers, we will formally return the documents,” Buch said.
Buch also indicated that the regulator will soon announce the format and set criteria based on which the documents will be approved or formally returned.
She made it clear that SEBI will not sit on them for months. “The process will change, gear-up for it... Some date in the near future, we are scheduling to do that. The FAQs, check list and all are coming. Before March, it will be done. For us, it’s the process improvement. Experienced investment bankers can recite the checklist in their sleep. So we want to do away with the current painful process. If there are 80 items on the checklist and you haven’t ticked any, we will return the documents. Wherever it’s our mistake and we sat on documents for 45 days, we will own it,” she said.
In her opinion, even though the bankers did not share required data most of the time, SEBI took the blame for the delay. “Don’t wait for SEBI to ask the questions, if it’s in the checklist just answer it. This is going to manifest itself. (Bankers) you will be answerable to your clients if SEBI returned the documents,” she said.
Buch, who was a career merchant banker before joining SEBI in 2017, asked her erstwhile colleagues on how not to compromise on due diligence regarding quality and right valuations of companies.
“When the valuations of any company are not justified and even a blind man can see it, the banker cannot shut the eyes.. and say he ticked the boxes and followed the process. What is the moral compass of this industry and individuals here?” she told the bankers.
In her view, Buch said merchant bankers can remain relevant only if they added value and not shift the blame on valuations to others. Otherwise, the community would be absolute due to highly automated process. Buch revealed how a promoter had faked a divorce despite living with his wife just to avoid disclosures on related party and the merchant bankers should decide where they stand on such cases. “Judging and bringing quality companies to market is your role as merchant bankers. You have to decide what moral compass you are following in determining this,” she said.
[The Hindu Business Line]