Business

Rights issue processing time to be reduced to 60 days

CHENNAI: In a market-friendly move, the Securities and Exchange Board of India (SEBI) has decided to reduce the time limit taken for processing rights issue from 109 days to 60 days, said its Chairman C. B. Bhave on Tuesday.

Addressing the National Executive Committee Meeting of the Federation of Indian Chambers of Commerce and Industry (FICCI), he said that the first rights issue with reduced timeframe would hit the market by the last week of this month and it would be totally different from that of State Bank of India’s recent right issue format. Besides, SEBI is also planning to send rights issue entitlement forms through the demat system so that it becomes simpler and easier.

Referring to initial public offering, Mr. Bhave said that five banks have agreed to debit application money of investors only when it was required and not 21 days in advance.

More banks have agreed to follow this method. This would completely eliminate the issue of refund warrants as the Registrar had to give instruction to the banks to block the amount only when it was required.

Mr. Bhave said that Automatic Lending and Borrowing Mechanism (ALBM) system of shares would take-off in a big way if the transactions were allowed for more than a week. The ALBM system was introduced some three-four months back.

Having introduced hedging mechanism in currency futures, SEBI is also actively looking at interest rate derivatives. At present, a joint committee consisting of SEBI and RBI is looking at in what way interest rate derivatives can be introduced.

He disagreed with a FICCI member that the submission of results on quarterly basis would disturb the long-term focus of the company.

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