January 3, 2024
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HDFC Bank goes live with ‘UPI for secondary market’ facility
In a strategic move aligning with the latest market dynamics, HDFC Bank has delved into transactions through NPCI’s UPI payments app as an integral part of the ‘UPI for secondary market’ facility. This initiative, officially announced by the lender, came into effect on Monday following the recent nod from the markets regulator, Sebi.
The Sebi and the stock exchanges have ushered in a transformative change effective January 1. They have granted permission for trading in the cash segment through a block mechanism, offered on an optional basis. This mirrors the Application Supported by Blocked Amount (ASBA) system utilised in primary markets. Under this framework, investors maintain their funds in their savings accounts, with the necessary funds being blocked rather than requiring an upfront transfer to the broker’s account for trade placement.
Notably, on December 29, the National Payment Corporation of India (NPCI) announced the impending launch of the ‘UPI for secondary market’ facility, set to debut on January 1 in the Beta phase, specifically catering to the equity cash segment. The rollout enjoys substantial support from key entities including clearing corporations, stock exchanges, depositories, stockbrokers, banks, and UPI app providers.
NPCI disclosed that during the initial phase, a select group of pilot customers would have access to the facility. Investors participating in this trial period can block funds in their bank accounts. These funds will only be debited by the clearing corporations after trade confirmation during the settlement period.
The statement further outlined that clearing corporations will directly facilitate payouts to these clients on a T+1 basis. The pioneering launch, operating in the Beta phase, is being spearheaded by brokerage Groww, in collaboration with BHIM and Yes Pay Next as the UPI apps at the forefront.
Initially, HDFC Bank and ICICI Bank customers will benefit from this groundbreaking facility. Additionally, HDFC Bank, HSBC, ICICI Bank, and YES Bank have taken on the role of sponsor banks for the clearing corporation and exchanges. Other crucial stakeholders in this move include Zerodha, Axis Bank, and YES Bank. Meanwhile, UPI-enabled apps like Paytm and PhonePe are currently in the certification phase and are gearing up to participate in the upcoming Beta launch.
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