UPI gaining traction among IPO investors

The UPI transaction limit was raised from ₹2 lakh to ₹5 lakh in December 2021 to promote increased participation of retail customers in financial markets

The value of initial public offerings (IPOs) raised through UPI touched a peak of about ₹6,000 crore in October last year.

The value of transactions executed via UPI is in line with the total issue size of IPOs for a particular month, RBI said in a report.

Calendar 2024 was a landmark year for IPOs, with over 90 companies collectively raising ₹1.62 lakh crore – more than double the ₹49,436 crore raised in 2023.

In all, there are 30 UPI apps live for IPOs, seven sponsor banks, and 51 customer banks that are eligible to act as issuer banks on the platform.

The UPI transaction limit was raised from ₹2 lakh to ₹5 lakh in December 2021 to promote increased participation of retail customers in financial markets, including investments in G-secs through the retail direct scheme and payments for IPOs.

The one-time mandate functionality for IPO payments was introduced in 2019.

To participate, an investor must establish a UPI ID and associated PIN via any UPI-compatible mobile app offered by Self Certified Syndicate Banks (SCSBs). Upon receiving a request to block the bid amount, the investor can authorize the action by entering their UPI PIN in the mobile application. If the investor is successfully allotted shares, the blocked funds are automatically transferred to the escrow bank.

In case of non-allotment, the funds will be unblocked by the SCSBs.

“The incorporation of UPI in the public issue framework substantially enhances user convenience, streamlines the process, and shortens the time required for public issues to be listed,” RBI said.

Overall, the volume of UPI transactions has increased from 375 crore in CY18 to 17,221 crore in CY24, RBI data showed. The total value of transactions surged from ₹5.86 lakh crore to ₹246.83 lakh crore in this period. This amounts to five year compounded annual growth rate of 89.3 per cent and 86.5 per cent in terms of volume and value, respectively.