SEBI’s Consultative Shift Leads to Sharp Drop in IPO Rejections for FY26

India’s primary market landscape witnessed a notable shift in FY26, with a sharp decline in regulatory rejections alongside record fundraising activity. The trend reflects evolving dynamics between issuers and the market regulator. 

Sharp Decline in Rejections and Withdrawals 

As per news reports, the number of draft offer documents returned or rejected by Securities and Exchange Board of India dropped significantly to just 2 in FY26, compared to 17 in the previous financial year. 

Market participants attribute this decline to a more facilitative approach adopted by the regulator. The number of IPO withdrawals also reduced to 16 in FY26 from 19 in FY25, indicating improved preparedness among companies entering the public markets. 

A key factor behind this shift has been better engagement between issuers and SEBI. Companies are now being given more time to respond to queries during the scrutiny process, unlike earlier practices where IPO approvals were expected within a 3-month window, often leading to documents being returned in cases of discrepancies. 

Record IPO Activity and Approval Trends 

The improved regulatory environment coincided with strong market activity. In FY26, as many as 112 companies raised ₹1.8 trillion through mainboard IPOs, surpassing ₹1.62 trillion raised by 78 companies in FY25. This marks the first instance of consecutive years of record fundraising in India’s primary market. 

Despite increased engagement, approval timelines have not slowed. In fact, the regulator maintained its pace, with instances of as many as 13 IPO approvals being granted within a single week, reflecting continued efficiency in processing applications. 

Pre-Filing Route Gains Momentum 

Another notable development has been the growing adoption of the pre-filing mechanism, also referred to as confidential filing.  

This approach allows companies to submit draft documents without immediately disclosing sensitive information to the public, offering greater flexibility during the early stages of the IPO process. 

The mechanism has gained traction particularly among new-age technology firms, as it helps mitigate the risk of premature strategic disclosures while maintaining regulatory compliance. 

Read More: NSE Aims for Year-End IPO: Plans 4–5% Stake Sale! 

Conclusion 

The sharp reduction in rejections, coupled with record fundraising levels and evolving regulatory practices, highlights a more streamlined IPO ecosystem, supported by improved issuer preparedness and enhanced engagement with the regulator.  

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.  

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