SEBI provides option to investors to apply in public issues of debt securities through the app/ web interface of Stock Exchange(s) using Unified Payments Interface (UPI) mechanism for value upto Rs. 2 Lac.
Introduction of Unified Payments Interface (UPI) mechanism and Application through Online interface and Streamlining the process of Public issues of securities under i) SEBI (Issue and Listing of Debt Securities) Regulations, 2008 (ILDS Regulations), ii) SEBI (Issue and Listing of Non-Convertible Redeemable Preference Shares) Regulations, 2013 (NCRPS Regulations), iii) SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008 (SDI Regulations) and iv) SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015 (ILDM Regulations)
1. 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.
2. Introduction of Unified Payments Interface(UPI) mechanism and an additional mode for application through online (app/ web) interface in public issues of securities captioned above:
2.1. After consultation with stakeholders, it has been decided to introduce the following in addition to the already specified modes under the ASBA Circular:
2.1.1. 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;
2.1.2. 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).
3. The process flow for applying through online interface of stock exchanges or intermediaries and availing the option of blocking funds though UPI mechanism is placed at Annex I to this Circular.
4. New entities / mechanisms part of the public issue process using UPI
4.1. National Payments Corporation of India (NPCI): NPCI, a Reserve Bank of India (RBI) initiative, is an umbrella organization for all retail payments in India. It has been set up with the guidance and support of the Reserve Bank of India (RBI) and Indian Banks Association (IBA);
4.2. Unified Payments Interface (UPI): UPI is an instant payment system developed by the NPCI. It enables merging several banking features, seamless fund routing & merchant payments into one hood. UPI allows instant transfer of money between any two persons’ bank accounts using a payment address which uniquely identifies a person’s bank account.
4.3. Sponsor Bank: 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.
5. Validation by Stock Exchanges and Depositories
5.1. 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.
5.2. Stock Exchanges and Depositories shall put in place necessary infrastructure for this purpose.
6. Other requirements
6.1. Stock Exchanges shall update demand data on working days on their websites which shall include all the UPI (accepted/ pending) and ASBA bids; ‘Working day’ for this purpose shall be the working day of the Stock Exchange on which debt securities are listed.
6.2. The additional text of data fields required to be included in the Application-and-bidding-form relating to UPI is placed at Annex II to this Circular. The roles of the Issuer, Registrar and Collecting Banks is given at Annex III of this Circular.
6.3. The details of commission and processing fees payable to each intermediary and the timelines for payment shall be disclosed in the offer document.
6.4. The intermediaries shall provide necessary guidance to their investors in use of UPI while making applications in public issues.
6.5. 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.
6.6. 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.
6.7. 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.
6.8. All entities involved in the process are advised to take necessary steps to ensure compliance with this circular.
Applicability of this circular
7. 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.
8. This circular is issued in exercise of the powers conferred under 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.
9. This circular is available on SEBI website at www.sebi.gov.inunder the categories “Legal Framework -> Circulars”. (contd… please refer above attachment)