Investors who are looking to apply in the public issue of debt securities have been provided with a new option by SEBI (Securities and Exchange Board of India). They can now do so with the help of the Unified Payment Interface (UPI) mechanism. SEBI has made it possible so that investors can use the online stock exchange(s) interface and can block funds via UPI for an application value of up to Rs. 2 lakhs submitted through intermediaries (Syndicate members, Registered Stock Brokers, Registrar, and Transfer agent and Depository Participants).
The Unified Payment Interface (UPI) is a widely used, instant real-time payment system that was developed by the National Payments Corporation of India to facilitate inter-bank transactions. The RBI (Reserve bank of India) regulates this interface which allows the transfer of money from one person’s bank account to another through a mobile platform.
This new circular aims at streamlining the process of public issues of securities by introducing the UPI (Unified Payment Interface) mechanism to aid the investors. It will be a step forward towards achieving a modern way in banking and financial transactions since UPI is a very commonly used mode of payment in India post demonetization.
Investors will be able to implement this option for the public issue of debt securities which open on or after January 1, 2021. SEBI has also mentioned that the details pertaining to the commission and processing fees that are payable to every intermediary should be disclosed in the document of the offer along with the timelines.
The securities and commodity market regulator also stated that it is incumbent that all the parties involved in the process must coordinate with one another to make sure that the listing of securities is completed and trading commences by T+6 day. Stock exchanges are mandated to update their demand data on working days on their websites which shall include all the UPI and ASBA bids.