© Reuters.
In response to the Reserve Bank of India (RBI) and Securities and Exchange Board of India (SEBI) imposing new restrictions on lending for share sales, finance entities are proceeding with caution in the current initial public offering (IPO) frenzy valued at ₹7,400 crore. The impact of these regulatory changes has been significant, with non-banking financial companies (NBFCs) witnessing a marked decrease in commercial paper (CP) borrowings, which have dropped to ₹3,500 crore this November following the implementation of a ₹1 crore limit per borrower for IPO loans by the RBI in April.
The ripple effects are evident in the reduced high net worth individual (HNI (NYSE:)) bids seen in recent IPOs like those of FSN E-Commerce Ventures and SBFC Finance. These compare to the historically high subscriptions witnessed in past offerings such as Paras Defence and Latent View Analytics before the new regulations took effect.
Key industry figures have weighed in on the situation. Analysts from 360 One Prime, Icra, and IIFL Securities have all highlighted the diminished role of NBFCs in IPO funding due to these regulatory changes. Moreover, with the introduction of a compulsory T+3 listing timeframe starting in December, further adjustments in the IPO financing landscape are anticipated.
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