PhonePe Becomes The First Non-bank To Facilitate IPO Bidding via UPI
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Walmart-backed PhonePe has become the first non-banking platform to enable Initial Public Offering (IPO) bidding through its UPI platform. PhonePe was also the first payments app to build on the UPI platform back in August 2016. “PhonePe has been the pioneer of UPI adoption, and we have continued the leadership by becoming the first non-banking app to enable IPO application under the UPI 2.0 framework,” said Hemant Gala, Head of Payments and Financial Services, PhonePe.
Earlier this year, securities market regulator SEBI (Securities and Exchange Board of India) and National Payments Corporation of India (NPCI), which is the payments governance body, had allowed investors to use their UPI IDs as a payment option for bidding their shares in an IPO in place of furnishing their bank account details. The move was aimed at reducing the time taken to complete the transaction and to push digital payments for IPOs. However, only banks were allowed to facilitate transactions through UPI. Now, PhonePe’s 55 million active users will be able to make use of this facility.
Investor will have to fill his UPI ID in the application form. Upon successful submission of the application, investor will get a request on his PhonePe app to approve blocking of funds. Once approved, the bank will automatically block funds equivalent to the amount applied for. Earlier, bidders used to block funds through the ASBA (Applications Supported by Blocked Amount) process, which took up to six days. Gala said that this process will reduce the transaction time to three days from the current period of six days.
“The new process has made applying for IPO extremely convenient for retail investors by increasing efficiency, eliminating the need for manual intervention and logistics at various stages. We look forward to similar collaborations in the future, with a goal to make the process completely digitised,” said Praveena Rai, Chief Operating Officer, NPCI, at the time of the launch.