Tag Archives: UPI

IPOs revised timelines – UPI in ASBA

SEBI has vide its circular dated 2nd June, 2021 revised its timelines for implementation of UPI in ASBA in respect of IPOs. This is after the stakeholders approached SEBI seeking additional time for implementation of system changes especially in view of the covid pandemic. Salient features are as follows:

1. SEBI vide Circular No. SEBI/HO/CFD/DIL2/CIR/P/2021/2480/1/M dated March 16, 2021 (hereinafter referred to as “the circular”), which came into effect from May 01, 2021 had put in place measures to have a uniform policy to further streamline the processing of ASBA applications through UPI process among intermediaries/SCSBs and also provided a mechanism of compensation to investors. 

2. The stakeholders have approached SEBI seeking additional time for implementing the system changes given the prevailing uncertainty due to the Covid-19 pandemic. 

3. In view of the representations received from stakeholders, the implementation timelines for the provisions of “the circular” shall be as under: 

3.1SMS Alerts: Para 9 of “the circular” prescribed the details to be sent by SCSB’s in SMS alerts. While SCSB’s shall continue to send SMS alerts during the actual block/debit/unblock of UPI mandate in the prescribed format, the details of total number of shares applied/allotted/non-allotted etc shall be included in SMS for Public Issues opening on/after January 01, 2022. 

3.2Web Portal for CUG: For ease of doing business, Para 10 of “the circular” prescribed a web portal to be hosted by Sponsor Banks for closed user group (hereinafter referred to as “CUG”) entities. In view of the representations received from the stakeholders, it has been decided that: 

3.2.1 The automated web portal shall be live and operational after due testing and mock trials with the CUG entities for Public Issues opening on or after October 01, 2021. The requisite information on this automated portal shall be updated periodically in intervals not exceeding two hours. 

3.2.2 In the interim, for the Public Issues opening from the date of this circular and till the automated web portal is live and operational, the Sponsor Banks shall send the details prescribed in Para 10 of “the circular” to the e-mail address of CUG entities periodically in intervals not exceeding three hours. In case of exceptional events viz., technical issues with UPI handles/PSPs/TPAPS/SCSB’s etc, the same shall be intimated immediately to the CUG entities so as to facilitate the flow of information in the Public Issue process. 

3.2.3 The Stock Exchanges and Lead Managers shall facilitate providing the requisite data of CUG entities to Sponsor Bank for the development of automated web portal. Such information shall be provided to the Sponsor Bank before opening of the Public Issue. 

3.3Completion of Unblocks by T+4: Para 13 of “the circular” prescribed the process and timeline for ensuring the completion of unblocks pertaining to UPI mandates on T+4 (T: Issue Closing Date). while the process of unblocking shall be completed by T+4, in view of the representations received from stakeholders, the following shall be the revised timelines: 

3.3.1 The Registrar to the Issue shall provide the allotment/ revoke files to the Sponsor Bank by 8:00 PM on T+3 i.e, the day when the Basis of Allotment (BOA) has to be finalized. 

3 3.3.2 The Sponsor Bank shall execute the online mandate revoke file for Non-Allottees/ Partial Allottees and provide pending applications for unblock, if any, to the Registrar to the Issue, not later than 5:00 PM on BOA+1. 

3.3.3 Subsequent to the receipt of the pending applications for unblock from the Sponsor Bank, the Registrar to the Issue shall submit the bank-wise pending UPI applications for unblock to the SCSBs, not later than 6:30 PM on BOA+1. 

3.3.4 To ensure that the unblocking is completed on T+4, the Lead Managers, on a continuous basis and before the opening of the public issue shall take up the matter with the SCSB’s at appropriate level. 

4. This circular comes into force with immediate effect. 

5. The contents of the circular shall be mentioned in the DRHP and RHP filed on or after the date of this circular. 

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processing of e-mandates

Framework for processing of e-mandates for recurring online transactions

A reference is invited to our circulars DPSS.CO.PD.No.447/02.14.003/2019-20 dated August 21, 2019DPSS.CO.PD.No.1324/02.23.001/2019-20 dated January 10, 2020 and DPSS.CO.PD.No.754/02.14.003/2020-21 dated December 4, 2020, wherein the framework for registering e-mandates for recurring online transactions using cards / wallets / Unified Payments Interface was put in place. The framework had ensured that changing payment needs of customers were accommodated by adequately balancing safety, security and convenience of such transactions. Stakeholders were given sufficient time to complete the process of migration to the framework by March 31, 2021.

2. It is, however, noted that the progress of onboarding existing as well as new mandates of customers as per the framework is not satisfactory. Keeping in view the requests of some stakeholders and to prevent any inconvenience to customers, it has been decided, as a one-time measure, to extend the timeline for ensuring full compliance to the framework till September 30, 2021. During the extended timeline, no new mandate for recurring online transactions shall be registered by stakeholders, unless such mandates are compliant with the framework.

3. Any further delay in ensuring complete adherence to the framework beyond the extended timeline will attract stringent supervisory action.

4. This directive is issued under Section 10(2) read with Section 18 of the Payment and Settlement Systems Act, 2007 (Act 51 of 2007).

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UPI mechanism for public issues

SEBI circular dated 23rd November, 2020 introducing Unified Payments Interface (UPI) mechanism whilst applying for public issues of securities upto Rs.200,000/- (Rupees two hundred thousand). This is in addition to the ASBA mechanism.

  1. SEBI Circular No. CIR/DDHS/P/121/2018 dated August 16, 2018 (hereinafter to be referred as ‘ASBA Circular’) lays down the process for payment for applications in public issue of debt securities through the facility of ASBA.
  2. Introduction of Unified Payments Interface (UPI) mechanism and an
    additional mode for application through online (app / web) interface in
    public issues of securities captioned above:
    2.1.After consultation with stakeholders, it has been decided to introduce the following in addition to the already specified modes under the ASBA
    2.1.1. Providing an option to investors to apply in public issues of debt
    securities through the app / web interface of Stock Exchange(s) with a facility to block funds through Unified Payments Interface (UPI) mechanism for application value upto Rs. 2 Lac;
    2.1.2. Permitting the UPI mechanism to block funds for application value
    upto Rs. 2 Lac submitted through intermediaries (Syndicate members, Registered Stock Brokers, Registrar and Transfer agent and Depository Participants).
  3. The process flow for applying through online interface of stock exchanges or intermediaries and availing the option of blocking funds though UPI mechanism is placed at Annex I to this Circular.
  4. New entities / mechanisms part of the public issue process using UPI
    4.1.National Payments Corporation of India (NPCI): NPCI, a Reserve
    Bank of India (RBI) initiative, is an umbrella organization for all retail
    payments in India. It has been set up with the guidance and support of
    the Reserve Bank of India (RBI) and Indian Banks Association (IBA);
    4.2.Unified Payments Interface (UPI): UPI is an instant payment system
    developed by the NPCI. It enables merging several banking features,
    seamless fund routing & merchant payments into one hood. UPI allows
    instant transfer of money between any two persons’ bank accounts using
    a payment address which uniquely identifies a person’s bank account.
    4.3.Sponsor Bank: Sponsor Bank means a Banker to the Issue registered
    with SEBI which is appointed by the Issuer to act as a conduit between
    the Stock Exchanges and NPCI in order to push the mandate collect
    requests and / or payment instructions of the retail investors into the UPI.
  5. Validation by Stock Exchanges and Depositories
    5.1.The details of investor viz. PAN, DP ID / Client ID, entered on the Stock
    Exchange platform at the time of bidding, shall be validated by the Stock
    Exchange/s with the Depositories on real time basis.
    5.2.Stock Exchanges and Depositories shall put in place necessary
    infrastructure for this purpose.
  6. Other requirements
    6.1.Stock Exchanges shall update demand data on working days on their
    websites which shall include all the UPI (accepted/pending) and ASBA
    bids; ‘Working day’ for this purpose shall be the working day of the Stock
    Exchange on which debt securities are listed.
    6.2.The additional text of data fields required to be included in the
    Application-and-bidding-form relating to UPI is placed at Annex II to this
    Circular. The roles of the Issuer, Registrar and Collecting Banks is given
    at Annex III of this Circular.
    6.3.The details of commission and processing fees payable to each
    intermediary and the timelines for payment shall be disclosed in the offer document.
    6.4.The intermediaries shall provide necessary guidance to their investors in use of UPI while making applications in public issues.
    6.5.All entities involved in the process shall co-ordinate with one another to ensure completion of listing of securities and commencement of trading by T+6 day.
    6.6.Stock Exchanges shall formulate and disclose the operational procedure for applying through the app / web based interface developed by them in order to apply in public issue on their websites.
    6.7.The Merchant Banker shall ensure that the process of applying through the app / web interface developed by the Stock Exchanges as well as the additional payment mechanism through UPI is disclosed in the offer document.
    6.8.All entities involved in the process are advised to take necessary steps
    to ensure compliance with this circular.
    Applicability of this circular
  7. The provisions of this circular shall be applicable to a public issue of securities under the captioned Regulations which opens on or after January 01, 2021. Stock Exchanges, NPCI, Sponsor Banks and Self Certified Syndicate Banks shall make required changes to implement the same from January 1, 2021. SEBI Circular no. CIR/IMD/DF-1/20/2012 dated July 27, 2012 shall stand repealed from that date

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refund of digital payment charges

Central Board of Direct Taxes (CBDT) has issued a circular no. 16/2020 directing banks to refund the charges they have collected on digital transactions after 1/1/2020. Digital transactions could be via internet banking, NEFT, RTGS, or UPI, debit card powered by RuPay, BHIM-UPI. Gist of CBDT circular follows:

In furtherance to the declared policy objective of the Government to encourage digital transactions and move towards a less-cash economy. the Finance (No. 2) Act 2019 inserted a new provision namely section 269SU in the Income-tax Act, 1961 (“the IT Act”), which provides that every person having a business turnover of more than Rs. 50 crores during the
immediately preceding previous year shall mandatorily provide facilities for accepting payments through prescribed electronic modes. Further, a new provision namely section 10A was also inserted in the Payment and Settlement Systems Act 2007 (“the PSS Act”), which provides that no Bank or system provider shall impose any charge on a payer making payment, or a beneficiary receiving payment, through electronic modes prescribed under
section 269SU of their IT Act. Subsequently vide notification no. 105/2019 dated 30.12.2019 (i) Debit Card powered by RuPay; (ii) Unified Payments Interface (UPI) (SHIM-UPI); and (iii) Unified Payments Interface Quick Response Code (UPI QR Code) (BHIM-UPI QR Code) were notified as prescribed electronic modes under section 269 SU of the IT Act.

  1. A circular no. 32/2019 dated 30.12.2019 was issued by the Board to clarify that based on section 10A of the PSS Act, any charge including the MDR (Merchant Discount Rate) shall not be applicable on or after 01 ” January, 2020 on payment made through prescribed electronic modes. However, representations have been received that some banks are imposing and collecting charges on transactions carried out through UPI. A certain number of transactions are allowed free of charge beyond which every transaction bears a charge. Such practice on part of banks is a breach of section 10A of the PSS Act as well as section 269SU of the IT Act. Such breach attracts penal provisions under section 271 DS of the IT Act as well as section 26 of the PSS Act.
  2. Banks are, therefore, advised to immediately refund the charges collected, if any, on or after 1″ January, 2020 on transactions carried out using the electronic modes prescribed under section 269SU of the IT Act and not to impose charges on any future transactions carried through the said prescribed modes.

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