NPCI to launch UPI for secondary market from Jan 1

The digital payment facility is based on blocking a specific amount for multiple debit transactions for trading in the stock market.

The National Payments Corporation of India (NPCI) has launched what it calls UPI for the secondary market from Jan 1, 2024. The facility is set to commence next week in its beta phase for the equity cash segment, NPCI said in a statement.

The digital payment facility is based on blocking a specific amount for multiple debit transactions for trading in the stock market. This will be available for a limited set of pilot customers in the beta phase, NPCI said.

Unified Payments Interface (UPI) is the most popular digital payment method in the country and is now the most popular payment method for IPO applications, cornering around two-thirds of the market share.

The facility, similar to the existing facility Application Supported by Blocked Amount (ASBA), has been approved by markets regulator SEBI and banking regulator RBI. ASBA has been instrumental in reducing the period between issue closure and the listing of shares.

According to NPCI, the launch has support from key stakeholders including clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers.

During the pilot phase, investors can block funds in their bank accounts, which will only be debited by the clearing corporations upon trade confirmation during settlement. Clearing corporations will directly process payouts to these clients on a T+1 settlement basis, where all trade is settled within one day of completing the transaction.

This beta launch will be available on the trading app Groww as the brokerage app while NPCI's BHIM app, Groww, and YES PAY NEXT as UPI apps facilitate this. From the banking side, this is available for HDFC Bank and ICICI Bank customers. Further, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are working as sponsor banks for the clearing corporation and exchanges.

Stock broker Zerodha and customer’s banks like Axis Bank and Yes Bank, and UPI-enabled apps like Paytm and PhonePe are in the certification stage and set to participate in beta launch soon, NPCI said.