The gap between the closure of an initial public offer and its listing may be reduced to between three and five days from the current 21 days.

The proposal, which will be one of the biggest capital market reforms in recent years if it is implemented, has been made by a Group on the Review of Issue Process, which is likely to submit a report on Thursday or Friday.

GRIP is a sub-committee of the stock market regulator's Primary Market Advisory Committee, which meets on Monday to consider the report. The report will be put up for public comment by the Securities and Exchange Board of India after that.

The decision to reduce the IPO closure and listing period was announced by the new Sebi Chairman C B Bhave after the regulator's board meeting in New Delhi on Wednesday.

Sources close to the developments said Sebi was also considering changing the price discovery, bidding and allotment process to eliminate grey market operations and having investor money locked up without interest payments for almost a month.

Since these reforms will require a smoothly functioning electronic market in which everything from applications to payments will be in e-mode, the broad proposal is to introduce the changes in phases.

In the first phase, applications will be allowed in both electronic and physical formats and the time gap between issue closure and listing kept to seven days.

The three-day process could be considered once sufficient experience has been gained on electronic applications.

"Large IPOs attract many first-time investors who are not necessarily skilled and technology-savvy. For these people we still have to provide an alternative mechanism," said the source.

As part of the exercise, the information required in the application form may be pared to the bare minimum like the Permanent Account Number or unique identification number issued by the Association of Mutual Funds of India.

Data like the applicant's father's name and address will be scrapped since a good deal of investor data are already available electronically.

The reduction in the time gap between issue closure and listing will address one of Sebi's major concerns that promoters artificially boost demand in the grey market ahead of an IPO listing.

Promoters typically take advantage of the time gap between closure and listing to put in bids in the grey market through.

Many brokers also take independent positions on stocks and charge clients a premium for doing so.

Shortening the time gap will also impact institutional investors who may have to pay the entire amount upfront along with their applications, like retail investors do now, against 10 per cent currently.