First IPO Issue with Mandatory UPI Based ASBA Option

National Payments Corporation of India (NPCI) today said the first initial public offering (IPO) through mandatory Unified Payments Interface (UPI) based ASBA for retail investors applying through brokers, DPs and RTAs, is on Monday, 29 th July, 2019.

UPI is an immediate real time payment system that helps instantly transfer funds between two bank accounts through mobile phones. UPI is now mandatory in ASBA for retail investors applying through brokers, DPs and RTAs. The phase wise implementation of UPI as a payment option started on Jan 1 st 2019. In Phase
I, the UPI mechanism was made available to retail investors but the existing process of submitting physical applications from intermediaries to banks also continued.

In the subsequent phase from July 1 st , 2019, UPI payment for IPO has been made mandatory for retail investors applying through brokers, DPs and RTAs. The existing timeline of T+6 days post issue closure will continue till the final phase is implemented.

“The new process shall increase efficiency, eliminate the need for manual intervention and logistics at various stages. The UPI 2.0 mandate feature of one time blocking shall ensure that the amount remains blocked (and not debited) in the customer’s account till allotment is done, as currently happening in the ASBA process,” said Praveena Rai, COO, NPCI.

In the final stage, Phase III, the gap between IPO closing and listing will be reduced to three days. UPI as an option shall eliminate the need for segregation of bid-cum-application forms basis the investor banks and sending it to the respective bank locations.

Manual verification of the customer’s signature on the application form is done away with as the same is substitutes by the customer authorizing the block by entering his UPI PIN on receiving the block collect request from the exchanges. The Registrar in this process shall co-ordinate with a single entity, the Sponsor Bank, for collating the details of the total block details and execution of allotment.

“The retail investors can enjoy the instant fund transfer experience of UPI while subscribing for IPO. The instant mandate creation ensures real time application submission,” Rai added.

Retail investors also have the options to submit the applications directly to the ASBA Banks (SCSBs) or to use the facility linked online trading, demat and bank account.


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