Sebi gives UPI mechanism to investors to apply in public issue of debt securities

Markets regulator Sebi on Monday provided an option to investors to apply in public issues of debt securities through the online interface of stock exchanges with a facility to block funds through UPI mechanism for application value up to Rs 2 lakh.

The regulator has permitted the unified payment interface (UPI) mechanism to block funds for such application submitted through intermediaries.

These debt securities included non-convertible redeemable preference shares, securitised debt instruments and municipal debt securities.

The new framework would be applicable to a public issue of debt securities which opens on or after January 1, 2021, the Securities and Exchange Board of India (Sebi) said in a circular.

Stock exchanges would have to formulate and disclose the operational procedure for applying through the app or web-based interface developed by them in order to apply in public issue on their websites, the regulator said.

Further, merchant banker would have to ensure that the process of applying through the app or web interface developed by bourses as well as the additional payment mechanism through UPI is disclosed in the offer document.

Sebi said the details of investor entered on the stock exchange platform at the time of bidding, would be validated by the bourses? with the depositories on real time basis.

Exchanges and depositories have been asked to put in place necessary infrastructure for this purpose.

Also, exchanges have been asked to update demand data on working days on their websites which would include all the UPI (accepted/pending) and ASBA (Applications Supported by Blocked Amount) bids.

The details of commission and processing fees payable to each intermediary and the timelines for payment would have to be disclosed in the offer document.

The intermediaries would have to provide necessary guidance to their investors in use of UPI while making applications in public issues.

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All entities involved in the process would have to co-ordinate with one another to?ensure completion of listing of securities and commencement of trading by T+6 day (trading plus six days).