The regulator said it wanted to reduce the time gap between allotment and application money actually debited from the investors' account.
"We want to reduce the time-frame and speed up the process of allotment and refund of money to the investors. We have asked Reserve Bank of India's permission to allow for refund through electronic clearing system," M Damodaran, SEBI chief said in Kolkata.
However, ECS refund will remain optional. In the second stage, SEBI would like to put a system by which the actual debit of investors' application money and allotment is very close, he said.
However, Damodaran said he was not in favour of returning to the stock-invest scheme which was phased out in the recent back due to some misuse in the past.
Stock-invest allowed investors to earn interest on the application till the allotment was made.
SEBI has recently done away with the discretionary allotment to qualified institutional bidders under the 100 per cent book building public issue.
Damodaran hopes that these steps would encourage the small investors in the market.