The move is part of the regulator's efforts to boost the dormant primary market and reduce the reliance on rating agencies, which have been under scanner globally for their role in the overall financial sector.
In May, 2007, Sebi had made it compulsory for all IPOs to be graded by rating agencies. A firm needed to disclose the grade given by a rating agency in the IPO prospectus.
"An issuer making an initial public offer may obtain grading for such offer from one or more credit rating agencies registered with the Board," Sebi said in a notification .
The IPO market has been dormant for almost three years now. Sebi-approved IPO proposals worth Rs 72,000 crore are yet to hit the market, according to Prime Data, a market research and consulting firm.
The last major IPO was from Coal India in 2010.
Currently, IPO grading is voluntary for companies listing on Small and Medium Exchange (SME) platforms.
These new norms, may be called the Sebi (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2014, would be effective from today, the regulator said.
In December last year, Sebi's board had approved this proposal.