IPO mania: 20 years ago investors would have lost Rs 1,300 crore as interest, says Nithin Kamath
IPO investors would have lost Rs 1,300 crore as interest, says Zerodha Founder and CEO Nithin Kamath.
«After a long time, we have had massive activity in the IPO market, with Rs 2.6 lakh crore blocked in bank accounts for IPOs worth Rs 7,600 crore. If this was 2003, it would take 16 working days (or ~1 month), and the entire money would have moved to investment bankers and cost investors (an interest forego) at least 0.5% (assuming 6% pa) or Rs 1300 crores,» Kamath tweeted.
As the regulatory regime evolved with time, the T+16 timeline was reduced to T+12, T+6 and then to T+3.
«Now, the money never leaves the bank account until allotment.
While institutional investors might miss out on interest income with money blocked in current bank accounts which don't yield any interest for those 3 days, retail investors continue to earn the interest from their savings accounts during the IPO process,» Kamath said.
In almost every aspect, capital market regulations in India have improved phenomenally over the last 20 years, especially in the last five years, he said.
Earlier in the year, Sebi had reduced the timeline for listing of IPOs from T+6 days to T+3 days. The new rules are on a voluntary basis for public issues from September 1, 2023, and become mandatory for public issues opening on or after December 1, 2023.
According to the regulator, the reduction in the listing timeline will benefit stakeholders as issuers would receive their funds and allottees would receive their securities in a shorter time period.
Further, the move ensures that subscribers who were not allotted shares would receive their money back quickly.
