Securities and Exchange Board of India (Sebi) might allow payments banks to accept IPO applications, treating them on par with commercial banks, reports Money Control.
The big picture: This is a bid to make the process of subscribing for new share sales easier for retail investors, and leverage the rise of app-based payments in Tier 2 or Tier 3 cities.
- Payments banks are currently barred from accepting IPO subscriptions. They also can't offer loans or issue credit cards, but can accept limited deposits and offer remittance services, net banking and fund transfer facilities.
- The Rs 2 lakh deposit limit could also be applied to them while accepting applications for share purchases in IPOs.
- Sebi is reportedly in talks with the Reserve Bank of India whose clearance is required for the move that would affect the six active payment banks in India - Airtel Payment Bank, India Post Payment Bank, Fino Payment Bank, Jio Payments Bank, Paytm Payment Bank and NSDL Payment Bank.
Of note: In March, Paytm Payments Bank received approval from Sebi to issue payment mandates for initial public offerings (IPOs) through the Unified Payments Interface (UPI), as per Economic Times. This allowed traders to invest in capital markets through various brokerage platforms.
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