The National Payments Corporation of India (NPCI) officially introduced ‘UPI for Secondary Market’ on Monday, enhancing the ease of equity trading in the country. The initiative, approved by the Securities and Exchange Board of India (SEBI) and based on the RBI-approved facility of single-block-and-multiple-debit in UPI, marks a substantial leap toward a more streamlined and efficient financial ecosystem.
Beta Phase Initiation in Equity Cash Segment
The launch signals the initiation of the beta phase in the equity cash segment. The NPCI has collaborated with key stakeholders including clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers. The functionality is initially available for a limited set of pilot customers.
ASBA-Like Facility and Prompt Clearing Corporation Payouts
During the live phase, investors can block funds in their bank accounts, with clearing corporations debiting these funds only upon trade confirmation during settlement. This innovative approach streamlines the process, ensuring that clearing corporations process payouts directly to clients on a T+1 basis.
‘T+1 basis’ in financial transactions denotes that the settlement or completion of a trade occurs one business day after the trade takes place. For example, if you buy or sell stocks today (T), the actual transfer of money and stocks happens between parties on the next business day (T+1).
Enhanced Control and Streamlined Settlement
This groundbreaking mechanism provides investors with greater control over their investments, allowing them to block funds in their bank accounts, thereby mitigating risks. Clearing corporations debiting funds solely upon trade confirmation during settlement not only accelerates the settlement cycle but also ensures a secure and transparent process. The introduction of UPI for the secondary market marks a significant leap toward a more transparent and investor-friendly trading environment.
Groww Takes the Lead in Beta Launch with Key UPI App Providers
The beta launch is facilitated by Groww, acting as the brokerage app alongside UPI apps like BHIM, Groww, and YES PAY NEXT. HDFC Bank and ICICI Bank customers are among the first to access this pioneering facility. Notably, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are serving as sponsor banks for the clearing corporation and exchanges.
Broad Participation Expected Post-Launch
Following the launch, other crucial stakeholders, including stockbrokers such as Zerodha, leading banks like Axis Bank and Yes Bank, and popular UPI-enabled apps such as Paytm and PhonePe, are in the certification stage and poised to join the beta phase shortly.
Prachee Suman | 1-1-24 | New Delhi