Investing up to Rs 5 lakh? Retail investors to use only UPI to block funds
Source: Business Standard
SEBI(Photo: Shutterstock)
The Securities and Exchange Board of India (SEBI) has introduced new guidelines to streamline the application process for public issues of debt securities. Retail investors applying for public issues of debt securities through stock brokers for amounts up to Rs 5 lakh should only use UPI to block funds, the market regulator has said. Individual investors would continue to have the choice of availing other modes through stock exchange platform for making an application in the public issue. The new rule would be applicable to public issues of debt securities, non-convertible redeemable preference shares, municipal debt securities and securitised debt instruments opening from Nov 1, 2024.
Key Changes:
UPI Mandate: Individual investors applying for amounts up to Rs 5 lakh through intermediaries will be required to use UPI to block funds.
Bank Account Linking: Investors need to provide their UPI-linked bank account details in the application form.
Shorter Review Periods: Sebi reduced the period for seeking public comments on the draft offer documents from 7 working days to 1 day for issuers whose specified securities are already listed and 5 days for other issuers.
Flexibility in Price Band Revisions: Issuers can now extend the bidding period by one working day in case of price band or yield revisions. The minimum subscription period has been cut from 3 working days to 2 working days. Further, in case of revision in the price band or yield, the bidding period disclosed in the offer documents, can be extended by one working day instead of three working days.
Alternative Options: Investors will continue to have the option of using Self-Certified Syndicate Banks or the stock exchange platform for applications.
Effective Date: The new provisions will come into effect on November 1, 2024.
“It has been decided that all individual investors applying in public issues of such securities through intermediaries (viz. syndicate members, registered stock brokers, registrar to an issue and transfer agent and depository participants), where the application amount is up to Rs 5 lakh, shall only use UPI for the purpose of blocking of funds,” Sebi said.
Rationale:
Alignment: The move aims to align the application process for debt securities with that of equity shares and convertibles.
Efficiency: Using UPI can streamline the application process, reducing paperwork and time.
Benefits:
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Investors will benefit from a more convenient and efficient application process. -
The use of UPI can minimize the need for physical documentation. -
UPI transactions are generally faster and more efficient than traditional banking methods.
First Published: Sep 25 2024 | 9:30 AM IST
