The question is why does the money have to leave the investor's account when he just applies: Bhave.

The Securities and Exchange Board of India hopes to allow investors to hold subscription amounts for initial public offerings in their bank accounts until allotment. This is to cut the time between the stock sale and listing.

The market regulator hopes to take a decision in this regard in the next three months, Sebi chairman C B Bhave told reporters at the Ernst and Young IPO Transformation Conclave - 2008.

"It is our belief that with the present technology it is possible to earmark the amount in the investor account itself and not have the money actually transferred," he said.

"For this we need to talk to different players involved to see that it is operationalised initially on a voluntary basis, and so keep both options open and slowly push it," he added.

The Sebi chief said that there were a host of issues plaguing the IPO market and that it could see some action in the coming months.

"Market intermediaries are going around a very important question and that is - why does the money have to leave the investor's account at all when he applies for an IPO and when he is not going to get anything? We have no business to sit on that money. We will focus on that issue," he said.

Bhave had last month said that the board would review the IPO process to reduce the time between the sale and listing and make it more efficient.

In a guarded criticism of pricing of issues in the primary market, he said merchant bankers and issuers were on the same side of the table.

"There is a perception that just because the markets came down, it is a bad time for IPOs. I would urge you to consider if it is that, or is it the pricing? Rather than looking at the western markets where liquidity is drying up, we must focus on Indian companies, which are acquiring firms abroad and going to need the capital. Are we, as market intermediaries, failing somewhere in not providing the proper bridge for these companies
to access financial resources?" Bhave said.

About 30 companies, whose draft offer documents have been cleared by the regulator, have not gone ahead with the IPOs, citing weak market conditions.

Several major IPOs, including Wockhardt Hospitals, Emaar-MGF and SVEC Constructions, were withdrawn in February and March. This was after the closure of the Reliance [Get Quote] Power IPO that garnered a large number of applications but plunged on listing.

The Sebi chairman also spoke about a platform for small and medium enterprises (SMEs). "The focus is on the top companies in the market. We have collectively failed to provide a good market for SMEs. We need to look at any segment where these can come in as well," he said.

Earlier, attempts have been made with the introduction of the Indonext platform on the Bombay Stock Exchange, but it has not really taken off.