In a significant move for market investors, the Reserve Bank of India (RBI) has announced an increase in the financing limit for Initial Public Offerings (IPOs), raising it from ₹10 lakh to ₹25 lakh per individual. This change aims to enhance participation in capital markets and improve liquidity. Concurrently, the RBI has lifted the cap on loans against shares (LAS) from ₹20 lakh to ₹1 crore. These measures are expected to attract more high-net-worth individuals (HNIs) to equity markets, bolstering activity within the primary market.
RBI Governor Sanjay Malhotra stated that while loans against shares and IPO financing were available previously, the limits had not been revised for many years. He noted that the last adjustment to the loan against shares limit occurred in 1998, indicating that the current increase, considering inflation, is long overdue. This adjustment comes at a time when primary market activity is on the rise, with anticipated sizeable IPOs this year from major players such as Reliance Jio, Tata Capital, and LG Electronics.
Additionally, the RBI has proposed removing the lending ceiling on listed debt securities, allowing banks more flexibility to support investors. The norms for external commercial borrowings have also been relaxed, broadening the base for borrowers and lenders. Risk assessments for non-banking financial companies (NBFCs) involved in infrastructure and housing finance have been lowered for ongoing projects, while licensing for new urban cooperative banks will restart after a two-decade hiatus.
To reduce compliance costs, the RBI plans to consolidate over 250 regulatory instructions into master directions and has eased restrictions on transaction accounts. Extension timelines for exporters’ repatriation from International Financial Services Centres (IFSC) accounts have also been announced. Furthermore, the RBI has introduced a six-month forex outlay for merchanting trade transactions, which involves the shipment of goods from one foreign country to another via an Indian intermediary, alongside setting up special rupee Vostro accounts to facilitate investment in corporate bonds and commercial papers.
Original Source: https://www.india.com/business/big-update-for-share-market-investors-rbi-takes-major-decision-on-ipo-financing-raises-limit-to-25-lakhs-and-loan-against-shares-to-1-crore-8110132/
Category: Business,Borrowings,loan against share,RBI on IPO financing,share market,Share market news
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Publish Date: 2025-10-02 12:20:00
