Usage of UPI by individual investors for making an application in public issue of securities through intermediaries

Executive Summary: This circular issued by SEBI mandates the use of UPI for individual investors applying for public issues of debt securities, non-convertible redeemable preference shares, municipal debt securities, and securitized debt instruments through intermediaries for application amounts up to Rs. 5 Lakh. This aligns the application process with that of equity shares and convertibles. The provisions of this circular are applicable to public issues opening on or after November 01, 2024. Key Points / Main Content: * **UPI Mandate for Individual Investors:** * Individual investors applying through intermediaries (syndicate members, registered stock brokers, registrar to an issue and transfer agent, and depository participants) must use UPI for blocking funds for application amounts up to Rs. 5 Lakh. * Investors must provide their bank account-linked UPI ID in the bid-cum-application form. * **Alternative Application Modes:** * Individual investors retain the option to apply through Self Certified Syndicate Banks (SCSBs) and Stock Exchange Platforms. * **Scope:** * This circular applies to public issues of debt securities, non-convertible redeemable preference shares, municipal debt securities, and securitized debt instruments. * **Effective Date:** * The provisions of this circular are effective for public issues opening on or after November 01, 2024. Impact Analysis: * **Issuers:** * Impact: Must ensure their application processes accommodate UPI payments for individual investors. * Action Required: Update application forms and systems to reflect the UPI mandate and communicate the changes to investors and intermediaries. * **Recognised Stock Exchanges:** * Impact: Need to facilitate UPI-based applications through their platforms. * Action Required: Modify platform infrastructure and guidelines to support UPI payments and update relevant stakeholders. * **Registered Merchant Bankers:** * Impact: Must advise issuers on the updated application process and ensure compliance with the UPI mandate. * Action Required: Incorporate the UPI requirement into their advisory services and due diligence processes. * **Registered Stock Brokers, Depositories and Registered Depository Participants:** * Impact: Need to support UPI-based applications from individual investors and update their systems accordingly. * Action Required: Train staff on the new procedures and update their application processes to facilitate UPI payments. * **Registered Bankers to an Issue and Registered Registrars to an Issue and Share Transfer Agents:** * Impact: Need to process UPI-based applications and ensure seamless integration with the overall application process. * Action Required: Modify their systems and procedures to accommodate UPI payments and update relevant stakeholders. * **Self Certified Syndicate Banks (SCSBs):** * Impact: While UPI is mandated for applications through other intermediaries, SCSBs continue to offer their existing application modes. * Action Required: Continue to provide existing application modes and inform investors of all available options. * **Individual Investors:** * Impact: Must use UPI for applications up to Rs. 5 Lakh when applying through intermediaries. * Action Required: Obtain a UPI ID linked to their bank account and use it when applying for relevant public issues through intermediaries.

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