Imagine a robot lawyer, instead of reading hundreds of pages of legal documents, quickly scans them and points out potential issues. That’s what SEBI, India’s stock market watchdog, is trying with Artificial Intelligence (AI) for processing draft offer documents!
Why is this a big deal?
When companies want to raise money by selling shares to the public (IPO), they submit huge documents explaining their business, finances, risks, and plans. SEBI needs to review these documents carefully to protect investors. But doing this manually takes a lot of time and effort.
Enter AI: the speedy document reader!
SEBI is experimenting with using AI tools like ChatGPT to do the initial screening of these documents. Think of it like a robot skimming the text, highlighting important points and flagging potential problems for human experts to review further.
Benefits of this brainy move:
- Faster processing: No more waiting months for approvals! AI can speed up the process, allowing companies to raise money quicker.
- More efficient use of resources: Human experts can focus on complex issues instead of routine checks.
- Better accuracy: AI can catch hidden patterns and inconsistencies that humans might miss.
But wait, there’s more!
AI can also:
- Analyze financial data: Quickly assess a company’s financial health and identify potential risks.
- Compare documents: Spot inconsistencies between different parts of the offer document.
- Identify red flags: Detect keywords or phrases that could indicate misleading information.
Example: Imagine a company claims to have “cutting-edge technology” in its offer document. AI can compare this statement to its research and development expenses to see if they match.
Is this the future?
It’s still early days, but SEBI’s experiment shows promise. While AI won’t replace human experts entirely, it can be a valuable tool for making the IPO process smoother and more efficient, ultimately benefiting investors and companies alike.
Bhoi Smrutirekha Dharanidhar