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.

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

SEBI is investigating six domestic investment banks for charging high fees on IPOs by small businesses. The fees, as high as 15%, are much higher than the standard 1-3%. SEBI is also looking to curb coordinated activities between banks and investors to ensure fair practices in the booming IPO market.