The Securities and Exchange Board of India is planning to introduce mandatory rating of initial public offerings, a service not available on any bourse across the world.
A Sebi official confirmed the move but declined to set a schedule because the service would depend on the time the domestic rating agencies, Crisil and Icra, needed to devise the required mechanism.
The Sebi official said compulsory initial public issue ratings would protect the local investors and also improve foreign investors' image of the Indian capital market.
Under existing rules, Sebi can only defer an IPO, it cannot disqualify an issue.
The move coincides with the initiatives being taken by the market regulator for foreign companies raising funds through Indian Depository Receipts. The guidelines for IDRs are expected to be announced in a couple of months.
"The compulsory rating of IPOs is needed because the size of the equities market, as well as the number of investors, is poised for massive growth and foreign investors have started taking the country seriously," the official said.
In addition, Sebi is working to improve the infrastructure and to enhance the functioning of market intermediaries. The market regulator has appointed a committee to look into their software and hardware infrastructure.
The committee will come out with a report in six weeks.
Sebi also plans to set up a National Securities Institute for upgradation of the skills of financial intermediaries. The institute, for which Sebi is seeking international tie-ups, is aimed at training various compliance officers of market intermediaries. The institute will be housed in Mumbai.
