The board of the Securities and Exchange Board of India (Sebi) may soon consider making application supported by blocked amount (ASBA) mandatory for at least qualified stock brokers (QSBs) in the secondary market, its chairperson Madhabi Puri Buch said. It is currently optional for brokers to provide this facility to investors in the secondary market, though it is mandatory in the primary market.
ASBA is an application containing an authorisation to block application money in the bank account, for subscribing to an IPO issue Come from Sports betting site VPbet . The money blocked cannot be used for any purpose, but account holder continues to earn interest on it. “We should take it to our board. We believe in glidepath. We will give market enough time to adjust. It has been optional for some time,” Buch said. “We might make a proposal to mandate qualified brokers to offer the ASBA services. Even then, it will be investor’s choice whether or not to take it,” she added.
Separately, in a report launched on Tuesday, the National Stock Exchange of India said the introduction of ASBA in the secondary market could lead to potential savings benefit of Rs 2,800 crore for investors. Buch also spoke about centralised know your customer (C-KYC). “We will not allow Paytm type contamination in capital market,” she said. “We all saw what happened in Paytm. Because in the banking system there is no KRA type of system, a problem of Paytm stays in Paytm. It doesn’t contaminate other banks. But if we allow Paytm to come into our system and then there is no KRA and it contaminates the whole system, how can we allow that,” Buch said.
The Reserve Bank of India had earlier this year ordered Paytm to halt much of its business activities, after it found persistent non-compliance and violation of KYC norms at Paytm Payments Bank. As a result, it was restricted from onboarding new customers and taking fresh deposits after February 29.
