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If you are also investing in IPO of small or medium sized companies then this news is for you. SEBI is preparing to increase the investment limit soon. So you can invest more money in it. SEBI has proposed to increase the application amount for IPOs of small and medium-sized companies. After the change in this rule, small investors will be able to invest more money and buy more shares than before. SEBI believes that this will make small investors more secure. SEBI has proposed to increase the minimum investment limit from application to IPO to Rs 4 lakh.
What is SEBI’s plan?
SEBI’s intention behind the proposal to increase the investment amount is to ensure that only those investors invest who have the capacity to take risk and invest. The move follows a growing trend of investors in SME issues. Investors have shown good interest in this issue for some time now. With the increase in SME issuances there has been a significant increase in investor participation in such offerings. The investor-applicant ratio was allocated four times in FY 2021-22, which has increased to 46 times in FY 2022-23 and 245 times in FY 2023-24.
Participation of retail investors increased rapidly
A SEBI suggestion states that participation of retail investors in SME IPOs has increased rapidly in the last few years. SME IPOs are high-risk and there is a risk of getting caught out if the outlook changes after listing. In view of this, keeping in mind the interests of small retail investors, it is proposed to increase the minimum application size in SME IPO from Rs 1 lakh to Rs 2 lakh.
Suggestions sought till 4th December
This will ensure that only investors with risk appetite and knowledge can apply for SME IPOs. Higher investment limit will reduce the participation of small investors and attract risk-taking investors. This will increase confidence in the SME segment. Another proposal suggests increasing the investment limit from Rs 1 lakh to Rs 4 lakh per application. SEBI has asked people to give suggestions in this regard by December 4.