SEBI allows debt securities allotment through UPI to encourage larger retail participation

After being enabled for equity IPOs, Unified Payments Interface (UPI), the digital payment railroad operated by the National Payments Corporation of India, is now ready to be employed to buy debt IPOs as well. The Securities and Exchange Board of India (SEBI) has enabled UPI payments for online purchase of debt securities issued to the public. This move by the regulator has the potential to invite more involvement of retail investors in debt securities, said stock market traders and broking houses.

Currently, to purchase debt securities, investors have to go through a paper-based process through their banks. The process followed to buy these securities is through ASBA (Applications Supported by Blocked Amount), where an amount would get blocked in the investor’s bank account and only get debited once the shares get allotted. SEBI has now also enabled UPI based transactions for the purchase of these securities, with the amount limit set at 2 lakh. Also, it is permissible for securities to be purchased through intermediaries like stockbrokers, and the digital convenience shall foster more retail participation in the debt market as chalked out by SEBI.


SEBI has designed detailed rules that need to be followed around allotment of these securities through the digital process. The regulator has enabled four processes through which the bids can be placed. Firstly, investors can go to their bank branches and place the bid through the paper-based process, blocking funds through ASBA. Secondly, they can submit the bid to a broker with their bank account details for blocking of funds. Thirdly, they can present to their banks with UPI IDs connected to the correct bank account for blocking of funds. Finally, they can also engage with the exchanges directly to place the order and make the payment through the UPI ID connected with the same bank account.

Exchanges are also trying to develop their own digital platforms through which trades can be conducted. While one of the sources mentioned above said that the modalities of the platform are not final and it needs some more work, the long-term goal is to promote the use of the app or web-based platforms for the purchase and sale of securities.