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HDFC Bank goes live with ‘UPI for secondary market’ facility in stock trading; see details

HDFC Bank

In a strategic move in line with current market dynamics, HDFC Bank has begun processing transactions via NPCI’s UPI payments app as part of the ‘UPI for secondary market’ capability. This strategy, which was officially disclosed by the lender, went into action on Monday after receiving approval from the markets regulator, Sebi. 

The Securities and Exchange Board of India (Sebi) and the stock exchanges have announced a seismic shift that will take effect on January 1. They have granted authority for trading in the cash component via a block method, which is optional. In main markets, this is similar to the Application Supported by Blocked Amount (ASBA) mechanism. Under this arrangement, investors keep their cash in savings accounts, with the necessary sums frozen rather than transferred. 

Notably, the National Payment Corporation of India (NPCI) announced on December 29 the upcoming introduction of the ‘UPI for secondary market’ service, which would debut on January 1 in the Beta phase, primarily catering to the stock cash segment. The deployment has received strong backing from major stakeholders such as clearing firms, stock exchanges, depositories, stockbrokers, banks, and UPI app providers. 

HDFC Bank

NPCI stated that during the first phase, a limited number of pilot clients would have access to the facility. Participants in this trial period have the option of blocking funds in their bank accounts. The clearing firms will debit these money only following trade confirmation during the settlement period. 

According to the announcement, clearing corporations will immediately facilitate payouts to these clients on a T+1 basis.  

Customers of HDFC Bank and ICICI Bank will initially benefit from this ground-breaking service. Furthermore, HDFC Bank, HSBC, ICICI Bank, and YES Bank have agreed to serve as clearing company and exchange sponsor banks. Other key players in this transaction include Zerodha, Axis Bank, and YES Bank. Meanwhile, UPI-enabled applications such as Paytm and PhonePe are undergoing certification and preparing to participate in the impending Beta launch.