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Retail IPO investors may soon get an alternative payment option

The Securities and Exchange Board of India (SEBI) is planning to introduce an alternative payment mechanism in initial public offers (IPOs) for retail investors, to reduce paper workload for intermediaries and speed up IPO listing. SEBI intends to allow the use of Unified Payments Interface (UPI) to do away with the need for physical movement of application forms from broker to bank and the need for verification of investors’ signature. Currently, there are two systems used for investors to apply in an IPO. One is through bank ASBA (application supported by blocked amount), in which an IPO applicant’s account does not get debited till the shares are allotted. The other one is 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.  

Read More at The Economic Times News date : 12 Jul 2018, Thursday

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