SEBI has decided to introduce the use of Unified Payments Interface (UPI) as a payment mechanism with Application Supported by Block Amount (ASBA) for applications in public issues by Retail Individual Investors (RIIs) through intermediaries (Syndicate members, Registered Stock Brokers, Registrar and Transfer agent and Depository Participants). A RII can submit bid-cum-application form with any of the intermediary and use his / her UPI ID for the purpose of blocking of funds.
It is expected that it will reduce the time duration from issue closure to listing by upto 3 working days. Qualified Institutional Buyer (QIB) and Non Institutional Investor (NII) are not allowed to use UPI.
A three-phased timeline has been introduced for implementation:
Phase I: From January 01, 2019, the UPI mechanism for retail individual investors through intermediaries will be made effective along with the existing process, for a period of 3 months or floating of 5 main board public issues, whichever is later. Existing timeline will of T+6 days will continue.
Phase II: After Phase I, the existing process of physical movement of forms from intermediaries to Self-Certified Syndicate Banks (SCSBs) for blocking of funds will be discontinued. However, existing timeline will continue.
Phase III: Subsequently, final reduced timeline will be made effective using the UPI mechanism.
All SCSBs offering facility of making application in public issues shall also provide facility to make application using UPI and for the purpose, shall undertake necessary certification with National Payments Corporation of India (NPCI) and shall submit the aforesaid certification to SEBI, latest by December 15, 2018. An investor making application can use only his / her own bank account or only his/ her own bank account linked UPI ID. Applications made using third party bank account or using third party linked bank account UPI ID are liable for rejection.
Source: SEBI Circular on Streamlining the Process of Public Issue of Equity Shares and convertibles
