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Pilot phase of 'UPI for secondary market' to begin Jan 1; CRED's Kunal Shah says 'big moment for India'

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Abhishek012

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Pilot phase of 'UPI for secondary market' to begin Jan 1; CRED's Kunal Shah says 'big moment for India':

During this pilot, investors can block funds in their bank accounts, which will only be debited by the Clearing Corporations and they will directly process payouts to these clients on a T+1 basis, said NPCI

SUMMARY
  • The launch of 'UPI for Secondary Market' is set to commence next week in its Beta phase for the equity cash segment
  • This Beta launch is facilitated by Groww as the brokerage app, alongside BHIM, Groww, and YES PAY NEXT as UPI apps
  • Initially, HDFC Bank and ICICI Bank customers will be able to avail this facility
The National Payments Corporation of India (NPCI) on Friday announced the launch of "UPI for Secondary Market" from January 1, 2024 in its Beta phase for the equity cash segment.

NPCI is an umbrella organisation for all retail payment systems in India. Unified Payments Interface (UPI) is used for immediate money transfer through mobile devices round the clock.

"Glad to announce the launch of 'UPI for Secondary Market' from 1st Jan’24 in its Beta phase for the equity cash segment, with collaborative support of key stakeholders including clearing corporations, stock exchanges, depositories, stockbrokers, banks & UPI app providers," said NPCI in a post on X platform (formerly Twitter).

ASBA-like facility of 'Trading supported by blocked amount in Secondary Market' through block mechanism was approved by SEBI, based on the RBI-approved facility of single-block-and-multiple-debit in UPI, with the implementation timeline of January 1, 2024, said NPCI in a press release.

uupi.jpg

The launch of 'UPI for Secondary Market is set to commence next week in its Beta phase for the equity cash segment, with the collaborative support of key stakeholders, including clearing corporations, stock exchanges, depositories, stockbrokers, banks and UPI app providers. Initially, this functionality will be available for limited set of pilot customers, added NPCI.

During this pilot, 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 basis.

CRED founder Kunal Shah said UPI coming into secondary market is a "big moment for India".

"News of UPI coming into secondary market is a big moment for India. As this move increases speed of money & opportunity to reach same day settlement for stock exchanges in India - first of its kind in the world," he said in a post on X platform.

This Beta launch is facilitated by Groww as the brokerage app, alongside BHIM, Groww, and YES PAY NEXT as UPI apps. Initially, HDFC Bank and ICICI Bank customers will be able to avail this facility. Further, HDFC Bank, HSBC, ICICI Bank, and Yes Bank are acting as sponsor banks for the clearing corporation and exchanges.

Other stakeholders, including stockbrokers such as Zerodha, 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.
 
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iamdhamo said:
So in this case won't brokers wallet get dormant? We can directly buy stocks using same option like ASBA right?
Click to expand...
No, only during IPO or new issue of shares, we can directly buy from company, it is a one time event. Rest of the times if you want to buy or sell stocks you need to use brokers, you can't do it directly.
 
What does this mean? To put it in perspective - you need to understand how you invest in stock markets today.

The current process is -
1. You say you want to buy 4 shares of Reliance Industries Limited - that is priced around 2500, so in total, you would need 10,000 rs to invest.
2. Now, you need to add these 10,000 rs to your brokerage account - i.e., in Zerodha, Groww, Upstox, etc
3. Now, only once you have added, can you place orders, and in case the order is executed, this amount will get deducted. Otherwise, it will stay in your brokerage account.

Now, with UPI directly coming into play, this whole process will become only 1 step -
1. If you want to buy 4 shares of Reliance Industries - your bank will automatically hold 10,000 rs from your account via UPI. If your order is executed - it will be deducted. Else, it will released and stay within your bank account.

Why is NPCI doing it?
1. This will bring in more liquidity in the market - the whole fatigue and constraint of adding money every time you want to buy a stock goes away. Now, with the impulse to buy some stock - to actually buy it- the whole process becomes very easy. Meanwhile, it also means that a lot of trade would happen based on impulse, and that’s going to be very dangerous for some sections of people who are new and act on tips.

2. By directly making your bank account the demat account - the entire intermediary (brokerage firms) gets out of the picture, which means they don’t get to touch your money, and that’s going to be a hit for them. Now, the Clearing Corporation is going to take care of your money, which is great for users. One key thing that I don’t have an answer to yet is how the brokerage and other taxes will be deducted from the user’s bank account, as till now - the brokerage firms used to take care of this entirely. This will also enable Indian stock markets to move in the direction of T+0 day settlements, which means the day you buy/sell your stocks, the same day you get your money - no more wait of 2-3 days to get your own money back.

This is really exciting because UPI is revolutionizing not just the way we make payments but also everything fintech.

As I said - I feel like National Payments Corporation Of India (NPCI) is the biggest fintech disruptor startup in our country.

P.S. - This feature is still in beta, and Groww is the company leading it.
 
Akio said:
What does this mean? To put it in perspective - you need to understand how you invest in stock markets today.

The current process is -
1. You say you want to buy 4 shares of Reliance Industries Limited - that is priced around 2500, so in total, you would need 10,000 rs to invest.
2. Now, you need to add these 10,000 rs to your brokerage account - i.e., in Zerodha, Groww, Upstox, etc
3. Now, only once you have added, can you place orders, and in case the order is executed, this amount will get deducted. Otherwise, it will stay in your brokerage account.

Now, with UPI directly coming into play, this whole process will become only 1 step -
1. If you want to buy 4 shares of Reliance Industries - your bank will automatically hold 10,000 rs from your account via UPI. If your order is executed - it will be deducted. Else, it will released and stay within your bank account.

Why is NPCI doing it?
1. This will bring in more liquidity in the market - the whole fatigue and constraint of adding money every time you want to buy a stock goes away. Now, with the impulse to buy some stock - to actually buy it- the whole process becomes very easy. Meanwhile, it also means that a lot of trade would happen based on impulse, and that’s going to be very dangerous for some sections of people who are new and act on tips.

2. By directly making your bank account the demat account - the entire intermediary (brokerage firms) gets out of the picture, which means they don’t get to touch your money, and that’s going to be a hit for them. Now, the Clearing Corporation is going to take care of your money, which is great for users. One key thing that I don’t have an answer to yet is how the brokerage and other taxes will be deducted from the user’s bank account, as till now - the brokerage firms used to take care of this entirely. This will also enable Indian stock markets to move in the direction of T+0 day settlements, which means the day you buy/sell your stocks, the same day you get your money - no more wait of 2-3 days to get your own money back.

This is really exciting because UPI is revolutionizing not just the way we make payments but also everything fintech.

As I said - I feel like National Payments Corporation Of India (NPCI) is the biggest fintech disruptor startup in our country.

P.S. - This feature is still in beta, and Groww is the company leading it.
Click to expand...
As a matter of fact, NPCI and UPI are going to be a known disruptor internationally very soon.
 
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