SEBI likely to make grading mandatory for IPOs

Dec. 16 :Market regulator Securities and Exchange Board of India (SEBI) is likely to make grading mandatory for initial public offers (IPOs), SEBI Chairman M Damodaran said today.

Speaking at a workshop on capital market for journalists organised by SEBI here, Damodaran said the primary market advisory committee, headed by Deepak Parekh, would soon give recommendations on these lines.

He said SEBI would take a final decision after the panel submitted its report.

Grading would be in the range from one to five, and would be done by the credit rating agencies.

Damodaran said the expenses for the exercise would be either borne by SEBI or the stock exchanges and not by the company coming out with the IPO.

He said the basic idea for making grading mandatory would to help investors in getting information about the quality of the IPO.

At present, grading of IPOs was not mandatory.

Meanwhile, SEBI was close to take a call on the issue of allowing stocklending and short-selling by institutions.

"We are at the penalty box, and we will have to just take a shot," Damodaran said.