SEBI To Roll Out Alternative Payment Mechanism For Retail IPO Investors From January
SEBI will launch UPI as an alternative payment option for retail investors, buying shares in IPOs in a phased manner from Jan. 1.
The Securities and Exchange Board of India on Thursday said that it will launch Unified Payments Interface as an alternative payment option for retail investors buying shares in a public issue.
This will be rolled out in a phased manner from Jan. 1 and will halve the listing time for an IPO to three days. The new mechanism will increase the efficiency of the existing system and curtail the need for manual intervention.
UPI is an instant payment system developed by the National Payments Corporation of India. It allows instant transfer of money between two persons’ bank accounts using a payment address which uniquely identifies the account.
As a part of the continuing efforts to further streamline the process, the market regulator decided, in consultation with the stakeholders to introduce the use of UPI as a payment mechanism with Application Supported by Block Amount for applications in public issues by retail investors through intermediaries.
The proposed process will increase efficiency, eliminate the need for manual intervention at various stages, and will reduce the time duration from issue closure to listing by up to three working days.SEBI
Currently, retail investors either invest in an IPO through bank ASBA or through broker ASBA, where the broker does the bidding and hands over the application form to the investors bank.
Considering the time required for making necessary changes to the systems and to ensure complete and smooth transition to UPI payment mechanism, the regulator said that the new mechanism and consequent reduction in timelines will be introduced in a phased manner.