A proposal was made by the market regulator SEBI on Wednesday to increase its investment limit to twice its current one for investing in retail, which is from 1 lakh to Rs. 2 lakhs in public issues. This move has been proposed to enable persons to take part in the primary issues of companies.

More than 5 years ago in March 2005 the limit of Rs. 1 lakh was fixed for retail investors.

Justifying its suggestion, SEBI explained that the enhancement for the retail investment limit is required since the increasing inflation rate, which rose from 4 percent in 2005 to the current 12 percent needs to be controlled.

Also, the increase in the BSE Sensex from 8,000 points in 2005 to the current 18,000 points needs control.

The indication is that the retail individual investors at present get to buy a less amount of securities with Rs. 1 lakh than they would have bought in 2005 with the same money.

The step taken is quite reasonable and the lukewarm response from the public to the recent offers may also be responsible for SEBI putting forward the proposal.