The Securities and Exchange Board of India (Sebi) is considering a proposal, whereby all qualified institutional buyers (QIBs) soon will have to pay an upfront margin of 25% while bidding for initial public offerings, against the current level of 10%.

Already, the regulator has said secure investors will have to make a 25% upfront payment while bidding for an IPO. The only difference would be that anchor investors

would get a firm allotment while QIBs will get a proportionate allotment based on the number of times an issue is oversubscribed.

The regulator’s aim is to eventually make institutional investors commit 100% funds at the time of applying for IPOs. At the same time, Sebi wants to go about it in a phased manner. “There will be a liquidity crunch if we mandate full payment by institutional investors, besides money being locked-in for over 15 days,” said a Sebi official.

In a bid to reduce the timeline between application and allotment, Sebi last year had introduced a facility — Application Supported by Blocked Amount (ASBA), wherein the investors’ application money will be debited from their bank account only after the shares are allotted.

Incidentally, the system couldn’t take off in a big way because of the crash in stock markets. However, with a revival in sight, the facility would help faster refunds in case of non-allotment of shares in the IPOs.