SEBI Exploring AI to Expedite IPO and Mutual Fund Applications
New Delhi, January 10: The Securities and Exchange Board of India (SEBI) is actively looking into the integration of Artificial Intelligence (AI) to speed up the approval process for Initial Public Offerings (IPOs) and Mutual Funds (MFs) applications. SEBI chairperson, Madhabi Puri Buch, revealed this initiative during her address at the inaugural session of the SEBI Samvad symposium.
Buch shared that a significant number of AI-driven projects are already underway within SEBI. A primary application of AI will be to streamline the processing of IPO and MF applications, which will enable faster approvals. “One of the key utilizations of AI that we are deploying is to do faster processing of all applications so that we can turn this around even faster,” Buch stated.
She also pointed out that as of November 2024, only two IPO applications had been pending approval for more than six months, a major improvement from the eight IPO applications still waiting for approval in March 2022. Similarly, for Mutual Funds, only one application was awaiting approval for over six months by November 2024, down from a staggering 69 in March 2022.
Buch emphasized that the introduction of AI technology will further enhance the efficiency of the approval process for IPOs and MFs. She also highlighted the thriving Indian IPO market, noting the substantial volume of applications coming in every week. “In the last nine months, we’ve seen equity raise approximately 3.3 lakh crores. We expect to reach around 4.3 lakh crores by the end of the year,” she added.
While capital raising through equity has witnessed a steady increase in recent years, Buch acknowledged that certain issues, such as preference and rights issues, occasionally go unnoticed in the primary market. To address this, SEBI has introduced measures like the Fastrack rights issue, followed by a preferential issue.
The SEBI chairperson also spoke about the importance of a Rs 250 systematic investment plan (SIP) for mutual funds to promote financial inclusion. “Just as capital formation is vital for economic growth, inclusion is equally important. Hence, the proposed Rs 250 SIP is essential to enhance financial inclusion,” she explained. Buch urged Challa Sreenivasalu, chairperson of the State Bank of India, to help popularize the micro-SIP initiative within the bank’s mutual fund business.
The Rs 250 SIP initiative is set to be launched soon, although the official date has not yet been confirmed.
Furthermore, Buch discussed the growth potential of Real Estate Investment Trusts (REITs), Infrastructure Investment Trusts (InvITs), and municipal bonds, forecasting significant expansion for these investment vehicles over the next decade.
Finally, she remarked on the increasing weight of India in the MSCI Index, which has led to a proportionate share of global passive funds flowing into Indian equity markets. As a result, Indian equities now attract about 20% of global passive fund inflows, part of the broader emerging market index.
This move to enhance the efficiency and inclusiveness of India’s capital markets reflects SEBI’s commitment to fostering growth and financial inclusion while leveraging modern technological tools like AI.
