The Securities and Exchange Board of India (Sebi) on Wednesday kicked off primary market reforms by amending the rules on collection of initial public offer (IPO) money.

The move is intended to not only help protect the funds of retail investors, but also make the existing issue process more efficient. Sebi issued circulars to market intermediaries, stating the decision to introduce ASBA (application supported by blocked amount) -- a supplementary process for applying in public issues.

The ASBA process will require retail investors bidding at a cut-off price to apply through self-certified syndicate banks (SCSBs), in which they have accounts. This process will require SCSBs to accept applications from investors, block the funds to the extent of the bid payment amount and then upload the details in the electronic bidding system. Once the basis of allotment is finalised, the amount required by the issuer will be released and the rest will be unblocked by the SCSB.

Banks will be responsible for resolving investor grievances. In case of failure of an issue, the bank will have to immediately release the block on receipt of request from the registrar. Registrars are required to maintain the electronic records relating to the bids received from the SCSBs.

Book running lead managers will have to intimate in writing the issue opening date to SCSBs. In case the issue is withdrawn, the lead managers will have to inform the SCSBs.

They will also be responsible for providing details on allotment to each bank. They will also have to be involved in post-issue activities such as allotment, refund, despatch and giving instructions to SCSBs, and regularly monitor "redressal of investor grievances arising therefrom".

In the new arrangement, the allotment process has to be completed within 15 days of the closing date of the issue.