The qualified institutional buyers will not have to pay any margins when bidding for shares in book-built issues, Securities and Exchange  Board of India chairman G N Bajpai said on Thursday.

QIBs are the most influential segment of the IPO market, subscribing to as much as 60-75 per cent of the issue amount. The Sebi decision will have a significant impact on the QIBs' participation in the book-built IPOs in the near future.

The decision is more significant since a raft of IPOs is expected in the next 12 months. Big issues in the pipeline include the Bharat Petroleum and Tata Consultancy Services IPOs.

"We have taken a policy decision not to impose margins on QIBs. Instead, they will not be allowed to withdraw bids as this, we feel, will dampen sentiment in the market," Bajpai added.

Speaking at a seminar organised jointly by Sebi and the Federation of Indian Chambers of Commerce and Industry in Mumbai, Bajpai said the new guidelines for IPOs would be announced soon.

On being asked whether Sebi, too, had started an inquiry into the flourishing participatory notes business, Bajpai said, "We are keen to know who are the actual buyers and from where the funds are coming."

Last month, the Sebi primary market advisory committee headed by HDFC chairman Deepak Parekh had recommended that QIBs be compulsorily charged a margin while bidding for shares in a book-built issue. The retail and non-institutional investors are required to pay a 100 per cent margin.

The exemption for QIBs has come in for criticism because these players bid for large quantities and their portion gets subscribed many times over. The heavily oversubscribed IPO of carmaker Maruti Udyog has been cited as an instance.

Bajpai also said Sebi's secondary market committee and the Reserve Bank of India were working on a revised scheme for margin trading and the stock lending and borrowing programme.

Though the RBI has permitted banks to finance margin trade, no bank has come forward. It is felt that banks are not comfortable lending to brokers for buying shares.

Easing up

• QIBs exempted from paying any margins in book-building issues
• QIBs subscribe as much as 60-75% of an issue
• Huge IPOs are expected in the next 6-12 months
• Mega issues include BPCL and TCS