SEBI allows UPI bids up to ₹5 lakh for public issues

The Securities and Exchange Board of India (SEBI) has extended the limit of bids for public issues retail individual investors can place through Unified Payment Interface (UPI) to ₹5 lakh, from the earlier limit of ₹2 lakh. The changes will be applicable on public issues opening on or after May 1, 2022, the capital markets watchdog said in a circular on Tuesday.

National Payments Corporation of India (NPCI) has reviewed the systemic readiness required at various intermediaries to facilitate the processing of applications with increased UPI limit, SEBI said in the circular. Following the assessment, NPCI had confirmed on March 30, 2022 that the more than 80% of self-certified syndicate banks (SCSBs), sponsor banks and UPI apps have conducted the system changes and have complied with its provisions, the market regulator added.

“Accordingly, it has been decided that all individual investors applying in public issues, where the application amount is up to ₹5 lakh, shall use UPI and shall also provide their UPI ID in the bid-cum-application form submitted with any of the entities mentioned herein,” SEBI said in the circular.

Individual investors have been asked to submit their UPI IDs through syndicate members, stock brokers registered with a recognised stock exchange, depository participants, or registrars to an issue and share transfer agents.

In November 2018, SEBI had introduced use of UPI as an additional payment mechanism with Application Supported by Blocked Amount (ASBA) for retail individual investors. The same was mandated with effect from July 1, 2019 through a circular dated July 28, 2019, for applications by retail individual investors submitted through intermediaries.

In December 2021, NPCI had modified the existing transaction limit of ₹2 lakh to ₹5 lakh for UPI-based Application Supported by Blocked Amount (ASBA) in initial public offers (IPOs).

The move is likely to draw in more investors to the IPO market, which saw tremendous response last year with big wig issues including Paytm, Nykka, Zomato among others. Notably, SEBI’s decision comes at a time when all players in the market – companies and investors both – are spooked due to the ongoing Russia-Ukraine war and its repercussions.