The National Payments Corporation of India (NPCI) is set to kick off an Application Supported by Blocked Amount (ASBA)-like facility in the secondary market from January 1.
The Unified Payments Interface (UPI) for the secondary market will start its beta phase next week for the equity cash segment. It will be supported by key stakeholders, including clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers.
The facility will enable investors to block funds in their bank accounts for secondary market trading rather than transferring the funds upfront to the trading member. The offering will be rolled out by integrating the UPI mandate service of single block and multiple debits with the secondary market trading.
“ASBA-like facility of ‘trading supported by blocked amount in Secondary Market’ through block mechanism was approved by SEBI, based on the RBI approved facility of single-block-and-multiple-debit in UPI, with the implementation timeline of January 1, 2024,” said NPCI in a statement.
NPCI added that the ‘beta phase’ of the service will initially be available for a limited set of users.
During the beta phase, investors can block funds in their bank accounts which will only be debited upon the confirmation of the trade by the Clearing Corporations. NPCI added that these Corporations will directly process payouts to their respective clients on a T+1 basis.
“This Beta launch is facilitated by Groww as the brokerage app, alongside BHIM, Groww, and YES PAY NEXT as UPI apps. Initially, HDFC Bank and ICICI Bank customers will be able to avail this facility. Further, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are acting as sponsor banks for the clearing corporation and exchanges,” added NPCI.
Meanwhile, applications of homegrown startups such as Zerodha, Paytm and PhonePe are currently in the ‘certification stage’ and, as per NPCI, will be onboarded on to beta launch soon.
This comes six months after the Securities and Exchange Board of India (SEBI) announced this facility in June.
It is pertinent to note that such a facility is already available in the primary market, or initial public offerings (IPOs) in the form of ASBA.
The offering is expected to give a major fillip to the use of UPI by retail investors and will leverage UPI’s layer of security to safeguard investor assets from misuse and other capital risks. It will also help the markets regulator to curb defaults by trading and clearing members.
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