Investors Are Preferring UPI To Join IPO
- ByAyushi Ray | August 2, 2021
Investors are preferring UPI to join IPO. However, payment failures still frustrate users using UPI interface, two years since the payment system was opened for IPO applications. As per statistics from the National Payments Corp. Of India (NPCI), which was the creator of UPI, 1.9 million retail investors applied for IPOs through UPI in June of the total 4.7 million retail IPO applicants during the month as calculated by Prime Database. Retail investors are those with share purchase applications of up to ₹2 lakh, which is also the upper limit for UPI transactions in IPOs. “The present volumes show investors are gradually getting the hang of using UPI for IPO applications, and that one might see it double in three to four years. As the percentage of younger investors increases, such new methods of investing will pick up,” said Mihir Gandhi, partner and leader (payments transformation) at PwC.
IPOs that happened in June include, Shyam Metalics and Energy ( ₹909 crore) which received the highest retail subscription (10 times), followed by Dodla Dairy (9.7 times), India Pesticides (9.66 times), Krishna Institute of Medical Sciences (2.13 times) and Sona BLW Precision also known as Sona Comstar (1.21 times). The entire process was not without glitches, as some public sector and cooperative banks have seen significant transaction failures. The most failures were seen in UPI transactions over Indian Overseas Bank and Punjab National Bank in June, NPCI data showed. Although UPI is considered safe and quick, there are some doubts. Firstly, the high rejection while using UPI as a payment solution: 28% of applications made by retail investors in Zomato’s IPO through UPI were rejected. In comparison, only 5% of non-UPI retail applications—those coming from bank-backed brokerages—were rejected,” said Jill Deviprasad, partner, investor relations practice, EY India.
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