The financial world is abuzz with the latest development from Mumbai, as the Securities and Exchange Board of India (SEBI) paves the way for a groundbreaking initiative. Starting from 01-Jan-2024, traders and investors will witness the launch of the ‘UPI for Secondary Market,’ an innovative facility aimed at streamlining trading processes in the equity cash segment.
SEBI’s Approval and Implementation Timeline
SEBI’s nod for the ASBA-like facility, ‘Trading supported by blocked amount in Secondary Market,’ marks a significant milestone. This approval, grounded in the RBI’s endorsement of the single-block-and-multiple-debit facility in UPI, sets the stage for a transformative change in the secondary market trading landscape.
Keep reading to find out what is ASBA.
Collaborative Support from Key Stakeholders
The upcoming Beta phase of this initiative has garnered support from a consortium of vital stakeholders. From clearing corporations and stock exchanges to depositories, stockbrokers, banks, and UPI app providers, the industry is rallying behind this innovative approach. The pilot phase will cater to a select group of customers, offering them a seamless experience of blocking funds in their bank accounts, with debits executed post-trade confirmation during settlement.
Pioneering the Beta Launch
Leading the charge in this Beta launch is Groww, the brokerage app, in collaboration with BHIM, Groww, and YES PAY NEXT as UPI apps. Initially, customers of HDFC Bank and ICICI Bank will have the privilege of availing this groundbreaking facility. Moreover, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are poised to act as sponsor banks for the clearing corporation and exchanges.
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Expanding the UPI Ecosystem
While the initial phase witnesses the participation of prominent entities, other stakeholders are not far behind. Stockbrokers like Zerodha, customer banks including Axis Bank and Yes Bank, and UPI-enabled apps like Paytm and PhonePe are in the final stages of certification and are gearing up to join the Beta launch soon.
A Glimpse into NPCI’s Vision
Central to this initiative is the National Payments Corporation of India (NPCI), an organization that has been instrumental in revolutionizing India’s payment landscape since its inception in 2008. With a portfolio boasting of transformative products like RuPay card, IMPS, UPI, BHIM, and more, NPCI continues to drive innovation, aiming to propel India towards a digital-first future.
Embracing a Digital Tomorrow
As India marches towards a digital economy, initiatives like ‘UPI for Secondary Market’ underscore the nation’s commitment to fostering innovation and inclusivity in the financial sector. With a vision to facilitate secure, accessible, and cost-effective payment solutions, this initiative is poised to redefine the contours of secondary market trading in India.
For a deeper dive into NPCI’s transformative journey and its array of offerings, visit NPCI’s official website.
ASBA stands for “Application Supported by Blocked Amount.” It is a process used by investors in India to apply for shares during an Initial Public Offering (IPO) or a Follow-on Public Offering (FPO).
Here’s a brief overview of how ASBA works:
- Blocking of Funds: Instead of paying the full amount upfront when applying for shares in an IPO or FPO, investors can block the funds in their bank account. This means the required amount for share application is set aside or blocked in the investor’s bank account but not immediately debited.
- Temporary Hold: The blocked amount remains in the investor’s bank account and is not available for withdrawal or any other transactions until the finalization of the allotment process.
- Allotment and Debit: Once the shares are allotted, only the required amount is debited from the investor’s bank account, and the remaining blocked amount is released.
- Benefits: ASBA ensures that investors’ money remains in their bank accounts until the finalization of share allotment. It offers a more efficient and secure method for applying to IPOs and FPOs, eliminating the need for refunds and reducing the time taken for share allotment and refunds.
The introduction of ASBA has streamlined the application process for IPOs and FPOs in India, making it more investor-friendly and efficient.
