By email [ Saturday, February 25, 2006  ]

Sir,

The Govt. should rethink on its decision to do away with the retail investors quota in the IPO's. The logic of forcing the retail investors to take the Mutual Fund route is unappealing as the risk appetite of the retail investors is increasing day by day. Greater presence of economic media forums and increased awareness, have ensured that the retail investors are exposed to quality information about the markets and thereby take informed decisions. 

But retail investors really don't have the financial muscle power to compete with Institutions or HNI's. Hence they cannot guarantee themselves the allotment of equities in a primary offer if they are placed on the same platform as the institutions. If anything, the Govt should plug the loopholes present in the system by enforcing stringent rules in opening up of demat accounts and verification of those accounts. A large scale information campaign about the companies hitting the primary markets and defaulting parties would also go a long way in ensuring safe retail participation.

- Manish Purang