UPI-based payments for IPOs from Jan 1, 2019 in a three-phased manner

Capital market regulator Sebi on Thursday said Unified Payments Interface (UPI) payment mechanism for public issues will commence from January 1, 2019.

The move will help reduce the time period between closing of an initial public offering (IPO) and listing of the security from six working days to just three working days.

The implementation of new payment system for IPOs will be carried out in a three-phased manner.

In the first phase, retail investors will get the option of UPI payments along with the existing options. The first phase will be between January 1 and March 31, 2019. The second phase will begin thereafter for a period of three months, when retail investors will get the option of only UPI payment.

The listing timeline in the first two phases will remain six working days. After completion of six months or 10 IPOs—whichever is later—the timeline will reduce to three days.  

The biggest impediment in reducing listing timeline for Sebi has been cheque payments. The UPI mechanism will help do away with physical handling of forms, said market players.

Reduction in listing timeline will give a boost to the IPO market as it will have issuers and investors tide over market volatility.