India's capital market regulator on Tuesday approved stricter norms for companies tapping the capital market to raise funds via initial public offer (IPO).

The fresh norms will ensure monitoring of funds raised via IPO by credit rating agencies till the proceeds are utilized, a statement by Securities and Exchange Board of India (SEBI) said.

SEBI said that if the issuer company's objective in the red herring prospectus mentions future inorganic growth in its objective without identifying the acquisition and investment target, the amount for such objective shall not exceed 25 percent of the total amount raised.

Similarly, the investment or expenditure limit for the general corporate purposes for funds raised via IPO has been stipulated at 35 percent, which was not under the supervision of the regulator earlier.

These norms come at a time when several new-age companies, popularly called start-ups, are slated to tap the capital market in the forthcoming year. A few such companies, who had tapped the capital market during the year had mentioned fresh funds for acquisition purposes, without disclosing details.

The regulator also addressed issues involving price bands, anchor investor lock-in period, and the quantum of holding a majority shareholder can offload on listing day.

In the recent IPOs, including food delivery chain Zomato, payment firm Paytm, and beauty start-up Nykaa saw huge volatility on the listing day due to exit by anchor investors.

To stabilize the share price and prevent losses for retail investors, the regulator amended the norms by increasing the lock-in period for anchor investors to 90 days from 30 days.