The market regulator is looking to release a consultation paper on bringing Application Supported by Blocked Amount or ASBA-like payment process for the secondary market by the end of this fiscal.
The Securities and Exchange Board of India is working with the industry to co-create this feature, Chairperson Madhabi Puri Buch said. The industry is expected to come back with solutions on this issue by December-end, she said. "We expect the consultation activity to be completed by end of December and thereafter come up with the structure."
According to her, the idea is to co-create the whole process rather than enforce the same on participants. There will be a "glide path" to bring this into the markets, and it may start with delivery-based trade in the cash market, she said.
ASBA is used in initial public offerings. An investor applying for shares blocks the amount in a bank account until securities are allotted. Only the amount equivalent to the value of shares gets debited. ASBA makes trading easier and also reduces the chances of default.
Recently, the Reserve Bank of India allowed consumers to use the UPI mechanism to block amounts in their bank account. This process could be used for investments and other transactions, the central bank said.
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