Published on Friday, January 4, 2019 by Chittorgarh.com Team | Modified on Tuesday, February 12, 2019
UPI means Unified Payments Interface. It is an instant payment system on the mobile platform. It offers inter-bank transfers between any two persons' bank accounts i.e. sending or receiving money in real-time among banks in India. In addition, UPI also allows blocking money for special purposes like IPO applications.
The National Payments Corporation of India developed UPI. It is regulated by the RBI.
In late 2018, SEBI permitted UPI as an alternative payment option for retail investors (Up to Rs 2 Lacs) to invest in IPO.
UPI payment option for IPO application will be implemented in phase as mentioned below:
From January 2019, the UPI is optional for Retail & Shareholder Category Investors. It will work along with the existing ASBA process. The listing of IPO shares will take 6 working days from the date of closure of the IPO.
From March 2019 or after 5 mainboard IPO, the UPI will be mandatory for Retail & Shareholder Category Investors. The listing of IPO shares will still take 6 working days from the date of closure of the IPO.
UPI to be mandatory for Retail & Shareholder Category Investors with up to Rs 2 Lacs for all IPO applications. The listing of IPO shares will reduce to 3 working days from the issue close date.
As per the SEBI Circular - Revised IPO rules for UPI, page 6 says:
In order to ensure parity across the various channels for submitted applications, it has been decided that an investor making application using any of the aforesaid channel, shall use only his / her own bank account or only his / her own bank account linked UPI ID to make an application in public issues.
It means once the UPI is fully implemented only 1 IPO application will be allowed per bank account. Also, the bank account should belong to the same person who is applying for IPO. This is unlike earlier where banks like SBI use to allow 5 application from one bank account, the new rule will allow only 1 application per bank account in an IPO.
This new rule will put a lot of hardship to Minor Account where online transaction banking is not allowed by most of the banks. It will also make it difficult for investors who apply for 1 application on each family member's name using the same bank account to increase the chance of allotment in an IPO.
Yes, from March 31st, 2019 you would not be able to apply in IPO using ASBA (net banking).
In case we don't see 5 mainboard IPO's from Jan 1st till March 31st, 2019, the mandatory UPI payment will be applicable only for 6th IPO onwards, irrespective to its date.
UPI is an online fund transfer/payment method similar to NEFT, RTGS or IMPS.
Every time you send or receive money online (using to NEFT, RTGS or IMPS), you have to share the bank account information i.e. Bank Name, Account Number, IFSC code etc.
With UPI, sharing the bank account detail is not required.
Using UPI you could create a unique ID for a bank account. This ID is called Virtual Payment Address (VPA). It's like a personalized email address which you share with anyone whom you would like to transact online. No need to share bank account details with UPI.
Example of VPA: rajivsingh916@icici
This unique code is linked with one of the bank accounts in the background. You have to share only VPA for transfer and not the whole bank account detail.
VPA is unique for each account. If you have 5 bank accounts on your name in the bank, you have to create 1 UPA for each account.
The Virtual Payment Address or VPA is the most important concept of UPI. It is also known as UPI PIN, UPI Code or UPI ID.
VPA is a unique ID which you create for your bank account. This unique ID can be used for online money transfer across the banks in India similar to IMPS, NEFT, RTGS etc.
UPI VPA look like 'rajivsingh916@icici'.
If someone wants to transfer money to you, you just have to provide this ID. No need to provide the bank account number, IFSC code, name etc.
Each banks mobile banking application has UPI as a payment option. Simply log in to mobile banking app and create a new VPA for your account with a choice of your words. That's it. It is as simple as creating an email address.
For ICICI Bank customers, UPI is available in its iMobile App which offers mobile banking.
Steps to setup UPI in ICICI Bank:
One the UPI ID created for the bank account, you can use it for any UPI online fund transfer or payments.
Other banks including HDFC, Kotak and SBI have similar steps to follows.
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