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Sebi Streamlines UPI-Based IPO Processing

This initiative is a big respite to retail investors and will lead to faster customer grievance resolution

The Securities and Exchange Board of India (Sebi) announced to streamline the processing of Initial Public Offers (IPOs) through  Unified Payment Interface (UPI) as an additional mechanism with Application Supported by Blocked Amount (ASBA) for the retail individual investors. 

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The intermediaries in the IPO ecosystem agreed on standard operating procedures at all levels to address investor issues. 

Some of the issues include delay in receipt of the mandate by investors for blocking of funds from the intermediaries and Self-Certified Syndicate Banks (SCSBs), and the failure to unblock funds for cancelled cases in the stock exchanges. 

What does this mean for investors?

“Sebi’s new circular lays down clear timelines. It also makes compensation mandatory for the intermediaries involved. The compensation is high in case the number is large. This will definitely help in faster investor complaint resolution and in case it is not resolved, there is a standardised compensation formula offered by Sebi,” says Ashish Rathi, Whole Time Director, HDFC securities. 

To put in place a proper measure and a uniform policy with a timely response to IPO process, SCSBs would have to identify the nodal officer for IPO applications. 

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This would be processed through UPI and the details need to be submitted to Sebi within seven working days. The details of nodal officers of SCSBs would be displayed on the Sebi website.

“Process time crunching and making compensation standardised along with adequate disclosures will make it more retail-friendly as per new Sebi circular, which is effective from May 01,” he adds.

The SCSBs will send timely information through SMS alerts for mandate block and unblock to the investors. 

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