The Securities and Exchange Board of India announced on Tuesday that it planned to introduce a slew of measures to kick-start the country's moribund primary market and strengthen its regulation.
It said it would soon issue guidelines to make these proposals into law, but did not specify any date.
The market regulator said in a statement that the steps included reducing the period between the close of book-building and listing to six days from 15 and tightening book-building norms to ensure better price discovery.
India's primary market has seen a steady decline in investor interest in the past decade as aggressive pricing by issuers and volatile bourses saddled retail investors with losses.
In the year to March 2003, domestic equity and debt issuers raised Rs 5,732 crore (Rs 57.32 billion) through the IPO route, less than half the Rs 13,312 crore (Rs 133.12 billion) mobilised in 1994-95.
The number of public issues also fell -- to 14 from 1,343 in 1994-95, the year in which the decline started.
The watchdog also said it would introduce a blackout period on research done by associates of the issue management team to prevent the publication of biased research reports.
It will prohibit institutional investors from withdrawing bids and introduce the concept of a moveable price band to replace the fixed-floor price.
It also plans to tighten rules for companies issuing capital. Issuers may now have to meet a minimum net asset requirement norm and complete financial closure before a public issue.
It said these steps were meant to prevent exposing the public to undue risk, to maintain the quality of issuers and also to keep 'fly-by-night' issuers at bay.
The capital market watchdog could also prescribe suitable asset cover to ensure full security for debentures.
