Securities and Exchange Board of India is likely to tighten norms for big investors like domestic and foreign financial institutions and mutual funds to make the investment process in public offers more transparent.

While there is no move to change the allocation pattern of retail investors and Qualified Institutional Buyers, Sebi wants to ensure that merchant bankers do not misuse the discretionary powers of allocating shares to big investors.

Though shares issued in IPOs are allocated proportionally or on a pro-rata basis among retail investors, merchant bankers can now allocate shares to big investors classified as

QIBs on a "discretion" depending on a host of factors including bid price, quantum of shares bid for and the quality of investor.

"This discretion is causing problem. If retail investors are allocated shares on a pro-rata basis, why not follow the same process for QIBs," an informed source said while hinting at changes in QIB investment norms.

An internal group under Sebi is looking into various modifications in the IPO investment norms.

At present, Sebi norms allow an allocation pattern of 50 per cent for QIBs, 15 per cent for non-institutional buyers and 35 per cent for retail investors.

Retail investors are classified as those who invest up to Rs 50,000 in an IPO.

The discretionary nature of allotment was prescribed earlier to safeguard a company tapping the market, as Sebi wanted some screening on QIBs before they are allowed to pick up stake in an Indian company.