India's securities regulator, worried about malpractice in a frothy IPO market, is investigating six domestic investment banks that have worked on offerings by small businesses, two sources with direct knowledge of the matter said.

Mumbai/IBNS: India’s securities regulator, the Securities and Exchange Board of India (SEBI), is investigating six domestic investment banks over concerns about malpractice in the country’s booming IPO market for small businesses,

Securities regulator, worried about malpractice in a frothy IPO market, is investigating six investment banks that have worked on offerings by small businesses, two sources with direct knowledge of the matter said.

It has found that at least half a dozen small investment banks have charged companies fees equivalent to 15% of funds raised via their IPO, they added. That's much higher than the standard practice of 1-3% in India. Reuters was not able to learn the names of the banks under investigation. SEBI did not respond to requests for comment.

The investigations follow efforts by Sebi to warn investors about the dangers of investing in some small businesses as well as plans for tighter rules for such IPOS