The Securities and Exchange Board of India (SEBI) has announced new guidelines. Starting from November 1, 2024, retail investors applying for public debt securities through stock brokers will be required to use the Unified Payments Interface (UPI) to block funds for amounts up to Rs 5 lakh.
The first key change introduced by SEBI is the UPI mandate. Retail investors wishing to apply for public issues of debt securities must now use UPI to block their funds. This change aims to simplify the payment process and enhance security for investors. Secondly, investors will need to provide details of their bank accounts that are linked to UPI when filling out their application forms. This step is necessary for the smooth processing of fund blocking.
Another important change is the shorter review periods. SEBI has reduced the time allowed for public comments on draft offer documents. Now, issuers whose securities are already listed will have just one working day for public comments, while other issuers will have five days. Additionally, if there are changes in the price band or yield, issuers can now extend the bidding period by one working day. Previously, this extension was three working days. The minimum subscription period has also been shortened from three working days to two.
Despite these changes, alternative options are still available for investors. They can apply through Self-Certified Syndicate Banks or the stock exchange platform, even with the new UPI requirement.
This change matters because requiring UPI for blocking funds in public issues of debt securities aims to make the investment process easier and more secure for retail investors. UPI is a popular payment method in India, known for its convenience and speed. By utilizing UPI, investors can expect a smoother transaction process without the need for physical paperwork or lengthy bank visits. Moreover, the introduction of shorter review periods and more flexible bidding rules can lead to faster and more efficient public issues. This efficiency can help attract more investors to the market, ultimately contributing to the growth of India’s capital markets.
SEBI’s decision to implement these guidelines aligns with its commitment to protecting investors and promoting a fair and efficient capital market. By leveraging technology, SEBI is helping to create a more inclusive investment environment. This initiative is expected to encourage greater participation from individual investors, enhancing their confidence in the financial system.
The new UPI guidelines for public issues of debt securities are a step forward in making investing easier for retail investors. As the Indian financial landscape continues to evolve, these changes reflect SEBI’s dedication to modernizing investment processes and ensuring that all investors have access to safe and efficient options. With these new rules, retail investors can look forward to a more user-friendly and secure investing experience starting in November 2024.
