What do you mean by Qualified Institutional Buyers (QIBs)?

Qualified Institutional Buyers are those institutional investors who are generally perceived to possess expertise and the financial muscle to evaluate and invest in the capital markets. In terms of clause 2.2.2B (v) of DIP Guidelines, a 'Qualified Institutional Buyer' shall mean: Public financial institution as defined in section 4A of the Companies Act, 1956; Scheduled commercial banks; Mutual funds; Foreign institutional investor registered with SEBI; Multilateral and bilateral development financial institutions; Venture capital funds registered with SEBI; Foreign Venture capital investors registered with SEBI; State Industrial Development Corporations; Insurance Companies registered with the Insurance Regulatory and Development Authority (IRDA); Provident Funds with minimum corpus of Rs.25 crore; Pension Funds with minimum corpus of Rs. 25 crore. 

As per the SEBI, following measures shall be implemented in respect of participation of QIBs in the book built issues: 

• QIBs shall bring at least 10 per cent margin while submitting the bids.
• The allotment of shares to QIBs shall be on proportionate basis. 
• Out of the existing 50 per cent portion available for QIBs, 5 per cent thereof shall be specifically available for Mutual Funds registered with SEBI. However, these Mutual Funds participating in QIB category will also be eligible for allotment in the remaining portion, i.e., 45 per cent, available to QIBs.