The Securities and Exchange Board of India (Sebi) is looking to introduce Unified Payments Interface (UPI) as an alternative payment option for the retail IPO investors. Sebi is planning to come out with a discussion paper on this soon.
UPI, being a mobile-based real-time payment platform for enabling instant transfer of funds from one bank account to another, can speed up the listing process, according to Sebi. This will further reduce the paperwork as well as application errors for intermediaries during the IPO process.
As of now, retail investors either invest in an IPO through bank ASBA (application supported by blocked amount) or through broker ASBA, where the broker does the bidding and hands over the application form to the investors’ bank.
Currently, 70% of retail application comes through broker ASBA, according to the reports.
“Since there is a physical movement of the application form from the broker to the investors bank, the process takes a day or two to complete. With UPI, Sebi is looking to minimise this time gap and further reduce the IPO listing time from current six days to three,” said a person close to the development.
How UPI For IPO Works?
As explained by the Sebi officials, under the new payment process, an investor will have to avail a 16 digit UPI Id from his/ her bank. The investors will then enter the bid details in the form as per current practice and also enter the exclusive 16 digit UPI ID.