Announcements

SEBI Issues New Guidelines To Streamline IPO Application Process

March 18, 2021

SEBI Issues New Guidelines To Streamline IPO Application Process

The Securities and Exchanges Board of India, in its March 16 circular, has issued new guidelines that will streamline the IPO application process and address the existing issues of IPO investors, parti­cularly those using the unified payment interface (UPI) for payments.

The regulator has identified issues related to IPO applications through the current UPI system and has issued guidelines to streamline the process and address investors’ grievances.

Some Issues Identified By The Regulator

  • Delay in receipt of the mandate by investors for blocking of funds due to systemic issues at Intermediaries/SCSBs. The banks, which are certified with SEBI, offering services in relation to ASBA, known as ‘Self Certified Syndicate Banks’ or SCSB(s). They allow the retail individual investor to apply in IPO’s using the ASBA payment method.
  • Failure to unblock funds for cancelled/withdrawn/deleted cases in the Stock Exchanges platform.
  • Failure to unblock the funds in cases of partial allotment by the next working day from the finalization of basis of allotment
  • Failure to unblock the funds in cases of non-allotment by BOA+1.
  • SCSB blocking multiple amounts for the same UPI application.
  • SCSB blocking more amount in the investors account than the application amount

Streamlining The IPO Application Process

Under the new norms, investment bankers and Self-Certified Syndicate Banks will have to compensate IPO applicants for lapses by paying Rs 100 per day or 15% per annum interest of application amount (whichever is higher).

“Lead managers shall ensure that the payment of processing fee/selling commission to the intermediaries be released only after ascertaining that there are no pending complaints pertaining to block/unblock of UPI bids, receiving the confirmation on completion of unblocks,” SEBI said in the circular.

To ensure timely information to investors, SCSBs shall send SMS alerts to mandate block and unblock, the circular said.

This circular will come into force for IPOs opening on and after May 01, 2021. To understand SEBI guidelines in detail, please refer to the circular.