The National Payments Corporation of India (NPCI) has introduced what it terms as UPI for the secondary market, scheduled to commence on January 1, 2024. In a recent statement, NPCI announced the upcoming beta phase of this digital payment facility, specifically tailored for the equity cash segment.
This innovative digital payment feature operates by blocking a designated amount for multiple debit transactions associated with stock market trading. During the initial beta phase, a limited set of pilot customers will have access to this functionality, as NPCI aims to test and refine the system.
UPI For Secondary Market: How Will it Work?
Unified Payments Interface (UPI) stands as the most popular digital payment method in India, currently dominating IPO applications with a market share of approximately two-thirds.
Similar to the existing Application Supported by Blocked Amount (ASBA) facility, this new offering has received approval from regulatory bodies, including the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI). ASBA has played a vital role in minimizing the time gap between the closure of an issue and the listing of shares.
NPCI assures that key stakeholders, encompassing clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers, have extended their support for the launch.
UPI To Assist Traders, Investors
In the initial pilot phase, investors will have the capability to block funds in their bank accounts, with the actual debit occurring only upon trade confirmation during settlement by clearing corporations. The settlement process will operate on a T+1 basis, ensuring that all trades are settled within one day of transaction completion.
For the beta launch, the trading app Groww will serve as the brokerage platform, while NPCI’s BHIM app, Groww, and YES PAY NEXT will facilitate UPI transactions. From the banking perspective, this service will be available for HDFC Bank and ICICI Bank customers. Additionally, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are designated as sponsor banks for clearing corporations and exchanges.
Stock broker Zerodha and banks like Axis Bank and Yes Bank, along with UPI-enabled apps such as Paytm and PhonePe, are currently in the certification stage and are poised to participate in the beta launch in the near future, as confirmed by NPCI.
