Market regulator Securities and Exchange Board of India on Tuesday approved in principle an alternative mode of payment for public and rights issues, which will enable applicants to keep money in banks till allotment of shares and thus eliminate the need for refunds.

"The board approved, in-principle, the concept of marking lien on bank account as an alternative mode of payment in public/rights issues," Sebi said after its board meeting in Mumbai.

The new method of payment, it said, will enable the application money to remain in the bank account of the applicant till allotment of the shares.

This will eliminate the process of giving refunds by companies to the applicants in case of non-allotment of shares, Sebi said, adding that the modalities would be announced later.

Presently, applicants have to wait for quite some time to get refunds on non-allotment of shares.

Sebi also decided to raise the minimum networth criteria for portfolio managers from Rs 50 lakhs (Rs 5 million) to Rs 2 crore (Rs 20 million).

The existing portfolio managers whose networth is less than Rs 2 crore will have to increase it to at least Rs 1 crore (Rs 10 million) within six months and to Rs 2 crore in the next six months from the date of notification of this regulation.

Sebi also decided that portfolio managers will not be allowed to float a scheme or pool the resources of clients in any way 'akin to mutual fund activities'.

Portfolio managers will be required to keep assets of each client under separate heads and not in a pooled manner, Sebi said, adding that they will be given six months to comply with this regulation.

The board of the market regulator also approved the Sebi (Issue and Listing of Debt Securities) Regulations, which were formulated to encourage corporate bonds markets by making the process of issuance more transparent. Sebi has earlier invited public comments on the draft regulations.