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Sunday, August 30, 2015

Payment Bank – The Interplay between National Securities Depository Limited (NSDL) and Application Supported by Blocked Amount (ASBA)



The Disruptive inspiration for NSDL:

          The 17,625 and new DP Service Centres can be tapped to open Saving Bank Accounts with the icing on the cake being linked Demat Accounts with minimal service charges.
          As ASBA is mandatory from January 1,2016 the float in the respective saving bank accounts will be higher as compared to float in SB Accounts of other Payment Banks.  
          What is your opinion?

          On 19th August 2015, Reserve Bank of India announced the first set of entities that were issued “in-principle” approval to set up payments banks.

These 11 entities “in-principle” approvals will be valid for a period of 18 months, during which time the applicants have to comply with the requirements under the Guidelines and fulfil the other conditions as may be stipulated by the Reserve Bank.

On being satisfied that the applicants have complied with the requisite conditions laid down by it as part of “in-principle” approval, the Reserve Bank would consider granting to them a licence for commencement of banking business.

Each of the 11 Applicants has their own set of strengths and weaknesses.

Each applicant has already commenced the brainstorming part.
Each applicant in the next six months will unveil roadmaps towards the goal of a full fledged licence to commence Banking.
Numerous articles in print and digital financial publications are trying to unravel of this Reserve Bank of India notification.
Securities Exchange Board of India (SEBI) Press Release on June 23rd 2015 offers some pointers about NSDLs’ path towards a full fledged banking licence.  

The below SEBI Board decision will be keenly analysed by NSDL Strategy Team - Streamlining the Process of Public Issues - Obviating the need to issue cheques

          In order to reduce the post-issue timeline for listing from existing T+12 days to T+6 days, increase the reach of retail investors and reduce the costs involved in public issue of equity shares and convertibles, SEBI Board took the following decision based on ASBA popularity.

Presently more than 99.5 % applications are received from centres where ASBA facility is available. Based on an analysis of a few public issues, in terms of amount, ASBA applications account for 99.90% of the total bid amount received from all investors.

Considering the reach and advantages of ASBA, SEBI has made it mandatory for all investors to make ASBA applications.

Amongst many other significant advantages, ASBA enables investors to give the mandate for payment of application money in the application form itself without suffering loss of interest for the intervening period.

ASBA also obviates the hassle of refund of money by the issuer as per the difference in application amount and the amount for which shares are finally allotted.

In order to substantially enhance the points for submission of applications, Registrar and Share Transfer Agents (RTAs) and Depository Participants (DPs) shall also be allowed to accept application forms (both physical as well as online) and make bids on the stock exchange platform. This will be over and above the stock brokers and banks where such facilities are presently available.

To help intermediaries and banks to modify their existing systems and train their staff and also enable the investors to adapt to the new system, there will be a phase-in period of 6 months. Accordingly, a public issue which opens on or after January 01, 2016 will have to follow the new system.

NSDLs promoters/shareholders are:
Promoters
  • Industrial Development Bank of India Limited (Now, IDBI Bank Limited)
  • Unit Trust of India (Now, Adminstrator of the Specified Undertaking of the Unit Trust of India)
  • National Stock Exchange of India Limited

Other Shareholders (i.e a captive market share)
  • State Bank of India
  • HDFC Bank Limited
  • Deutsche Bank A.G.
  • Axis Bank Limited
  • Citibank N.A.
  • Standard Chartered Bank

Few Statistics:-
Active Client Accounts -- 1,39,47,307
Depository Participants -- 270
DP Service Centres -- 17,265
DP Geographical Coverage (Cities/Towns) – 1632




2 comments:

Arti Singh said...

cv

Arti Singh said...

Thanks for sharing such impressive perspective with us. Your information is delicate in which there is description about Safe ePayments.

Depository services UP

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