SEBI Circular Summary: SEBI/HO/DDHS/DDHS-PoD-1/P/CIR/2024/128:
On September 24, 2024, SEBI issued a circular focusing on the application process for public issues of various securities, including debt securities, municipal debt securities, non-convertible redeemable preference shares, and securitized debt instruments. SEBI has mandated the use of UPI (Unified Payments Interface) for individual investors applying through intermediaries for amounts up to ₹5 lakh. This change aims to streamline the process and align it with that of equity shares.
Key Provisions:
- Streamlining the Application Process:
- SEBI seeks to align the public issue process for debt securities, municipal debt securities, non-convertible redeemable preference shares, and securitized debt instruments with the established procedures for equity shares and convertible securities.
- Mandatory UPI Usage:
- For applications submitted via intermediaries like syndicate members, registered stock brokers, registrars to an issue, and depository participants, investors applying for amounts up to ₹5 lakh must use UPI to block funds.
- Investors are required to enter their UPI ID linked to a bank account in the bid-cum-application form.
- Other Application Methods Remain:
- Investors retain the option to use traditional methods, such as applying through Self-Certified Syndicate Banks (SCSBs) or using the Stock Exchange Platform.
- Effective from November 2024:
- These new provisions will apply to all public issues of relevant securities opening on or after November 01, 2024.
- Regulatory Context:
- The circular is issued under the authority of SEBI's regulatory framework, including:
- SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021
- SEBI (Issue and Listing of Municipal Debt Securities) Regulations, 2015
- SEBI (Issue and Listing of Securitised Debt Instruments and Security Receipts) Regulations, 2008
- It aims to protect investor interests while promoting the development and regulation of the securities market.
The circular signifies SEBI’s continuous efforts to modernize and safeguard public issue processes. For individual investors applying in public issues of debt securities, the mandatory use of
UPI through intermediaries brings digital convenience and security. This update is vital for students preparing for compliance exams, ensuring they are aware of recent regulatory changes.
Recap Quiz – Test Your Knowledge for NISM Exam Preparation
When will SEBI’s UPI mandate for public issues of debt securities take effect?- A) September 30, 2024
- B) November 01, 2024
- C) October 10, 2024
- D) December 31, 2024
Answer: B) November 01, 2024
What is the maximum application amount that can be submitted using UPI as per the circular?- A) ₹1 lakh
- B) ₹2 lakh
- C) ₹5 lakh
- D) ₹10 lakh
Answer: C) ₹5 lakh
Which intermediaries are involved in the UPI-based application process according to SEBI’s circular?- A) SCSBs and Stock Exchange Platforms
- B) Depository participants and stock brokers
- C) Banks only
- D) Stockbrokers only
Answer: B) Depository participants and stock brokers
Does SEBI’s circular apply to public issues of equity shares?Under which regulatory power was SEBI’s UPI circular issued?- A) SEBI Act Section 11(1)
- B) SEBI Regulations 2021
- C) Securities Act of 2015
- D) Companies Act 2013
Answer: A) SEBI Act Section 11(1)