One of the most exciting manifestations of the Digital India story is in the process of being unleashed in the Indian investment scenario shortly. The undersigned was one of the financial professionals who has seen the Capital markets in all its glory when it was a retail market where millions of investors used to participate in IPOs. (It was then termed Public Issues). The undersigned had also created an index to project the investment potential of a proposed public issue at different prices etc. However subsequently, changes in the policy of SEBI converted the IPO markets from a retail market to a whole sale market.
Now the sunny days for the IPO market appears to back with SEBI finalizing a proposal for e-IPO. SEBI is expected to finalize a detailed guideline for e-IPOs by the end of this month as per this ET report.
SEBI had issued a discussion paper which provides some details of what may be coming forth. This is an attempt to use the current secondary market infrastructure where investors have been investing in various capital market instruments through their brokers using e-investment tools. Since IT provides all the flexibility for auctioning, reverse auctioning, instant processing of applications etc, it is the ideal platform to involve a large number of Netizen investors directly in the process of IPO.
In fact just as Retail business has seen a sea change with Flipkart/Snap deal/Amazon etc coming into fray, the e-IPOs are sure to revive the retail interest in the primary markets which is very essential for the growth of Capital markets in India. This is bound to give a huge boost to the capital markets much more than a good monsoon this year or a RBI dropping interest rates or Inflation coming down etc which are being touted as huge market movers.
I congratulate SEBI on its move.
Before we end, there is of course a Cyber Law angle into the development since IPO applications need to be “Digitally Signed” and the Certifying authorities may be rejoicing the development. I recall that one of the first E-Commerce initiatives I had personally supervised was the hosting of public issue application forms of Corporation Bank some time in the mid 80’s with a running serial number which was a great innovation at that time. Lot of water has flowed under the bridge since then and we will now see an e-form being filled up and digitally signed, application electronically processed and demat shares issued all in the back end servers…. Three Cheers to ICT revolution..