Investors no longer have to wait for weeks for refund of their IPO application money.The application money earmarked for an IPO will now remain in the applicant’s bank account till the allotment is finalised, thus eliminating the refund process. This means that the money marked for the IPO will not be used for any other payment obligation during that period. At the same time, the applicant will enjoy the interest payable on the amount.This would also reduce the burden on registrars and merchant bankers. But bankers to the issue can no longer enjoy the floating interest. Most important of all, investors would not have to wait for their refund money. It also ensures that a liquidity crisis such as that of January 2008 does not occur again. At that time, many investors were unable to buy scrips which were at attractive lows, as their money was locked up in the Reliance Power and the Future Capital IPOs.
Still a lot of reform work is required in primary markets.