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UPI to ease out payments process for retail IPO investors soon: SEBI


In its drive to ease out the process of IPOs so as to encourage more companies to opt for listing and to attract more and more investors, SEBI is to roll out yet another die in form of UPI based transactions.

The Securities and Exchange Board of India has announced that it will provide the retail investors with Unified Payments Interface (UPI) as an alternative mode of payment. This feature will be introduced in phases starting from January 2019.

The step is taken to make the process of buying shares in public issues hassle-free, efficient and less time-consuming.

UPI based bank to bank payments will improve on the existing system as the need for manual effort will reduce.

Further, the use of UPI will be integrated with Application Supported by Blocked Amount (ASBA) for retail investors applying for public issues.

Currently, the process involves an investor creating an ASBA account to apply for a listing, whereby the broker ASBA does the bidding and hands over the application to investors bank.

After the UPI service is rolled out, the time taken in amount transfer from bank ASBA to company’s bank will reduce significantly.

Overall, with this feature the process is expected to shorten by 3 days, while it currently takes about 6 days for company to complete the IPO listing procedure.

Recently, SEBI had also announced a proposal to ease out the listing process for startups by removing some norms, like reducing the time limit for migration of mainboard from three to one year; bringing down minimum transaction lot from Rs 10 lakh to Rs 2 lakh and minimum allottees cap from 200 to 50.

Currently, this proposal has been released for public consultation.

Till now, a lot of companies refrained from going IPO due to the strict norms of SEBI, which on one hand were appropriate to protect the interest of investors, made the process difficult for the companies on the other.

With SEBI easing out the norms and simplifying the process, making it more efficient, the number of IPOs in the startup ecosystem is expected to increase. However, before that, it remains to be seen that how many of these proposals are actually realized and to what extent.

The development was reported by Mint via PTI.

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