UPI is a real-time payment platform that helps transfer funds between two bank accounts instantly through mobile phones. The idea to introduce UPI facility for IPO subscription is to shorten the time between the closing of the issue and listing of shares to three days.
Nearly 2.78 lakh applications were received from the retail investors in the Affle India IPO of which only 31,000 were successful.
Bankers said many investors have struggled to operate the UPI platform. After submitting the application, investors need to authorise the transaction. Bankers said many investors did not do that, resulting in their applications getting rejected. Some investors applied to the IPO but did not did not download the UPI app and activate it.
Under the new payment process, investor will have to first create a UPI ID, which will be provided by his or her bank. Investors would need to fill in the bid details in the form as per current practice and also enter the exclusive UPI ID. The forms would be submitted to the broker, who in turn will upload the bid details along with the UPI ID on the stock exchange platform. After this, the investor has to confirm the blocking of the amount.
Stock exchanges will do the validation of the investor’s details following which they will share the bid details with the sponsor bank — which will be appointed by the company coming out with the IPO. The sponsor bank will initiate the request with the investor to authorise blocking of funds in case of allotment.
Once the investor accepts the request on his mobile entering the UPI PIN, his bank will block the funds. Investors will have the option to modify or withdraw the bid till the closure of the bidding period.
“Nearly 14,000 applications that were received from the retail investors for the Affle India issue were rejected for technical glitches” said a banker. “While some did not activate the BHIM app and authorise the transaction, a few failed to link their app to their bank accounts with funds.”
“Also, many people give one mobile number for many family bank accounts. In such a case, the number is being mapped to only one UPI account which would be functional.”
The Rs 459-crore Affle India IPO was the first issue under the new UPI mechanism, which was made mandatory for retail investors staring July 1.
Earlier, Sebi had said that an application made using incorrect UPI handle or using a bank account of an SCSB or bank which is not mentioned in the aforesaid list is liable to be rejected.
“There are some technical issues with the UPI transactions which would be sorted out over a period of time, but it’s a good platform for the IPO transactions” said Vinay Agarwal, CEO, Angel Broking.
(Disclaimer: Bennett, Coleman and Company Ltd (BCCL), the publisher of ET, holds a 5.2 per cent stake in Affle Holdings, the promoter of Affle (India))
