Thursday, May 15, 2008

IPO refund process shortened - relief for retail investors

No need to wait for the refund of your IPO application Money. Many companies have in the past delayed the refund process which pinches the retail investor.

SEBI has decided to shorten the process of the same via the concept of marking a lien on the bank account. For this SEBI is planning to introduce a value-paid instrument, which would help banks to freeze the application money till the allotment is made. Thus the amount would continue to remain in the client's account but would not be available for withdrawal or cheque payment. It would, therefore, continue to earn interest in the intervening period. On receipt of advisory from the registrar about the allotment of shares, the bank would release the amount equal to the cost of total number of shares the client has been allotted and rest of the amount will be released from the freeze.This system is expected to begin by the first week of July.