At the end of a dire 2013, Sebi began meeting with the heads of investment banking in India to discuss ways in which it could invigorate the market.
Last year, the country's initial public offering (IPO) volume totalled US$232 million, according to Dealogic data - US$165 million of this was issued solely by telecommunications company Just Dial.
â€œThe regulatory environment is not unfriendly but controversies in government circles over the past two years coincided with difficult local and global macro problems, so it was a perfect recipe for disaster,â€ said one Mumbai-based head of India equity capital markets (ECM) at a global bank.
The main problem is that institutional investors tend only to be allowed a 50% share of the total book. Of this, only 30% can be allocated to anchor investors.
â€œAnchor investors take the lead in giving confidence on pricing and valuation so in an environment like this when weâ€™re struggling to attract retail, why not give them a bigger stake," said an India ECM head at a US bank.
"The regulator is becoming aware of this and itâ€™s something they want to prioritise.â€
In the past, the regulatory focus has been on protecting the retail investor base. There has been much discussion, for example, about forcing companies to issue retail shares with a safety-net feature allowing investors to call the shares if they tank during the first six months of listing.
Also under discussion are tax-breaks for retail investors, and some bankers have even suggested that companies issue convertible bonds in tandem with an IPO to offer additional protection.
In addition to meeting with banks, Sebi has decided it will start to meet prospective issuers to tell them the regime is not onerous, and that the exchange will offer expedited clearing for transactions, said one Mumbai-based executive director at an international bank.
Finally the regulator has asked the Association of Investment Bankers to prepare a note on further advisable measures, he said.
However, regardless of regulatory improvements, many say the overwhelming problem is a lack of capital expenditure, which means there is little need for fresh primary capital.
In terms of the pipeline, very few new mandates are being given for onshore listings and many old mandates have expired. However, several businesses in a variety of sectors are beginning to employ banks for overseas IPOs â€“ mostly in Singapore and the US, following a regulatory change at the end of last year.