SEBI Streamlines UPI Payment Process for IPOs

Moneylife Digital Team 26 April 2022

Investor Interest

Market regulator Securities and Exchange Board of India (SEBI) has streamlined the payment of processing fees through the unified payments interface (UPI) system for shares applied for and allotted during an initial public offering (IPO).

Additionally, the market regulator has devised a new reporting format for capturing the data of all applications supported by block amount (ASBA) applications unblocked by self-certified syndicate banks (SCSBs) and their corresponding date of actual unblock.

The new format has been put in place after reviewing the performance of SCSBs on timely unblocking of application amounts and feedback received from market intermediaries, SEBI said in a circular. SCSBs will have to make an application to the merchant bankers with a copy to the registrar to the issue in the prescribed format to claim the processing fee.

This is subject to certain conditions, including the application being made no later than 30 days from the finalisation of the basis of allotment by the registrar to the issue. Further, SCSBs will have to make the application only after unblocking of application amount and paying the applicable compensation relating to investor complaints.

The SCSBs will continue to be responsible for providing the information requested by the merchant bankers and registrar to the issue or issuer and also remain liable to pay compensation for delays in unblocking application amounts after SCSBs have claimed the processing fee.

"Needless to state that SCSBs are liable to face appropriate action under securities laws for non-compliance with the requirements of this circular," SEBI added.

Concerning SMS alerts to investors, SEBI said the SCSBs and UPI apps eligible for public issues will send SMS alerts to investors for all ASBA applications and may also provide the invoice in the inbox as an additional feature to verify the UPI mandate details. The move comes after NPCI had approached SEBI with a proposal to include 'invoice in the inbox' as one of the options for ensuring timely information to investors.

The details that need to be sent through SMS include the name of the IPO, application amount and date on which amount was blocked in case of blocking of ASBA application amount through the bank, online and UPI channels.

Further, SEBI has said that after the debit is done and the ASBA application amount is unblocked, the SMS that these companies should be sending have to have details such as the name of the IPO, the amount to be debited and the date on which the amount was debited in the full allotment scenario.

Lastly, if the allotment is not successful, the SMS should have the information about the amount to be unblocked and the date when the amount was unblocked.

This circular comes into force with immediate effect. Provisions of this circular will become part of the offer documents, including draft red herring prospectus (DRHP) and red herring prospectus (RHP), SEBI said.

It may be recalled that in March 2021, SEBI had put in place measures to have a uniform policy to further streamline the processing of ASBA applications through UPI process among intermediaries or SCSBs, and also to provided a mechanism of compensation to investors. Thus SEBI had put the plans in motion for bringing UPI into the fold in March 2021.

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