Banks Urge SEBI to Cut QIP Look-Back Period From 26 Weeks Amid Sharp Market Correction

Banks and Corporate entities have urged the Securities and Exchange Board of India (SEBI) to reconsider its pricing formula for Qualified Institutional Placements (QIPs), warning that current rules are severely restricting capital raising activity in the market. According to industry sources, the existing methodology has made fundraising increasingly difficult amid volatile equity conditions. Stakeholders argue that urgent reforms are needed to revive institutional fundraising momentum.

Under current SEBI regulations, the floor price for QIPs and preferential issues is determined by taking the higher of the average closing price over the previous two weeks or 26 weeks. Market participants say this system is now outdated, as it heavily reflects older price levels that no longer match current market realities. Following recent corrections in equities, the 26-week average remains elevated, resulting in artificially high pricing floors.

Due to this gap between historical averages and current trading prices, companies are finding it difficult to attract investors. Institutional buyers are reportedly unwilling to subscribe at inflated valuations, especially in a weak or declining market. As a result, several planned QIP issuances have been delayed, reduced in size, or shelved entirely. Investment bankers say this has created a serious bottleneck in fundraising activity.

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Data from market trackers indicates a sharp slowdown in QIP activity in 2026 so far. Only four QIPs have been completed this year, with an average issue size of ₹1,091 crore. This compares to significantly higher activity in 2025, when multiple issuances were completed with larger average deal sizes. Market experts say the decline highlights growing inefficiencies in the current pricing framework.

Industry participants are now proposing reforms such as reducing the look-back period from 26 weeks to 8–10 weeks and giving greater weight to recent prices. There are also suggestions to relax the “higher-of” rule during periods of sustained market weakness. While SEBI has not yet initiated a formal consultation, discussions around reform are gaining momentum as companies push for more flexible fundraising norms.

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