An alternate payment system to ensure that the retail investor’s money is not blocked if shares are not allotted will be launched as a pilot by August-end.
“Hopefully, by August-end we will start the pilot project,” Securities and Exchange Board of India (Sebi) chairman C B Bhave told reporters here on the sidelines of a seminar organised by the Financial Planning Standards Board of India.
“We really don’t know how the system works. We need to get used to it. We have to sort out glitches, if there are any, in the beginning,” he said, adding that the current system and the alternate system will co-exist.
The alternate payment system will exempt retail investors from making full advance payment, and instead let the amount be parked in their bank accounts till the completion of allotment. Under the scheme, the banks will block the fund to the extent of bid amount, unblock once allotment is finalised and transfer the amount for allotted shares to the issuer.
