Introduction of UPI mechanism to Streamline the process of Public issues of Securities under SEBI Regulations
Securities and Exchange Board of India (SEBI) vide notification / Circular No. SEBI/HO/DDHS/CIR/P/2020/233 issued and publishes dated 23rd November, 2020, has published a circular related to Introduction of Unified Payments Interface (UPI) mechanism and Application through Online interface and Streamlining the process of Public issues of securities under – SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations), SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) and SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (ILDM Regulations)” in exercise of the powers conferred under sections Section 11(1) of the Securities and Exchange Board of India Act, 1992 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets.
- The Circular is issued to :
- Recognized Stock Exchanges
- Registered Depositories
- National Payments Corporation of India
- Registered Depository Participants, Stock brokers, Merchant Bankers,
- Registrars to an Issue and Share Transfer Agents, Bankers to issues,
- Sponsor Banks
- Self-Certified Syndicate Banks
- Issuers who propose to list Debt securities, Non-convertible redeemable
- preference shares, Securitised Debt Instruments and Municipal Debt
- Securities issued under the respective Regulations
- Applicability of the Provisions mentioned in this Circular:
The provisions of this circular shall be applicable to a public issue of securities under the captioned Regulations which opens on or after January 01, 2021.
Stock Exchanges, NPCI, Sponsor Banks and Self Certified Syndicate Banks shall make required changes to implement the same from January 1, 2021. SEBI Circular no. CIR/IMD/DF-1/20/2012 dated July 27, 2012 shall stand repealed from that date.
- Earlier Circular which lays down the process for payment
SEBI Circular No. CIR/DDHS/P/121/2018 dated August 16, 2018 (hereinafter to be referred as ‘ASBA Circular’) lays down the process for payment for applications in public issue of debt securities through the facility of ASBA.
- Provisions of this Circular
1. SEBI vide this circular has introduced the following in addition to the already specified modes under the ASBA Circular:
|Application value upto Rs. 2 Lac:|
|Providing an option to investors to apply in public issues of debt securities through the app / web interface of Stock Exchange(s) with a facility to block funds through Unified Payments Interface (UPI) mechanism for application value upto Rs. 2 Lac||Permitting the UPI mechanism to block funds for application value upto Rs. 2 Lac submitted through intermediaries (Syndicate members, Registered Stock Brokers, Registrar and Transfer agent and Depository Participants).|
2. New entities / mechanisms part of the public issue process using UPI
- National Payments Corporation of India (NPCI): RBI Initiative which is an umbrella organization for all retail payments in India
- Unified Payments Interface (UPI): UPI is an instant payment system developed by the NPCI which enables merging several banking features, seamless fund routing & merchant payments into one hood
- Sponsor Bank: means a Banker to the Issue registered with SEBI which is appointed by the Issuer to act as a conduit between the Stock Exchanges and NPCI in order to push the mandate collect requests and / or payment instructions of the retail investors into the UPI
3. Validation by Stock Exchanges and Depositories
- The details of investor viz. PAN, DP ID / Client ID, entered on the Stock Exchange platform at the time of bidding, shall be validated by the Stock Exchange/s with the Depositories on real time basis.
- Stock Exchanges and Depositories shall put in place necessary infrastructure for this purpose.
4. Additional Requirements:
- Stock Exchanges shall update demand data on working days on their websites which shall include all the UPI (accepted/pending) and ASBA bids.
- The additional text of data fields required to be included in the Application-and-bidding-form relating to UPI
- The details of commission and processing fees payable to each intermediary and the timelines for payment shall be disclosed in the offer document.
- The intermediaries shall provide necessary guidance to their investors in use of UPI while making applications in public issues.
- All entities involved in the process shall co-ordinate with one another to ensure completion of listing of securities and commencement of trading by T+6 day.
- .Stock Exchanges shall formulate and disclose the operational procedure for applying through the app / web based interface developed by them in order to apply in public issue on their websites
- The Merchant Banker shall ensure that the process of applying through the app / web interface developed by the Stock Exchanges as well as the additional payment mechanism through UPI is disclosed in the offer document
Data fields required in Application-and-Bidding-Form relating to UPI
1. Main Application form
a) Payment details –UPI ID with maximum length of 45 characters
b) Acknowledgement Slip for SCSB / Broker / RTA / DP
- Payment details to include UPI
c) Acknowledgement Slip for bidder
- Payment details to include UPI ID
2. Overleaf of Main Application Form
- UPI Mechanism for Blocking Fund would be available for Application value up to Rs.2 Lac
- Bidder’s Undertaking and confirmation to include blocking of funds through UPI mode
- Instructions with respect to payment / payment instrument to include instructions for blocking of funds through UPI mode
To know more about:
- Process flow for applying though UPI mechanism
- Role of Issuer, Registrar, Stock Exchange, Intermediaries and Collecting Bank
Kindly go through the SEBI Circular (Link Given Below)
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