Payments Banks To Be Allowed To Operate As Investment Bankers Under SEBI Regulations

SEBI: SEBI, the market regulator, has permitted payment banks to engage in investment banking activities. It further said that non-scheduled payments banks with prior RBI approval will be allowed to operate as bankers to an issue (BTI). "The blocking/movement of funds from... investor to issuer shall... be made through... the savings account of... investor held with the payments bank," SEBI stated.

The markets regulator Sebi authorised payments banks to carry out investment banking operations on Tuesday to make it easier for investors to engage in public and rights offerings through multiple payment channels. In a circular, Sebi stated that non-scheduled payments banks with prior clearance from the Reserve Bank of India (RBI) will be able to operate as a banker to an issue (BTI). This is contingent on meeting the requirements outlined in the BTI regulations.

Furthermore, payments banks that are registered as BTIs will be able to function as self-certified syndicate banks provided they meet the requirements set by the Sebi from time to time.

"The blocking/movement of funds from the investor to the issuer shall only be made through the savings account of the investor held with the payments bank," Sebi said.

In a July 30 announcement, the regulator revised the Bankers to an Issue regulations, allowing any other banking business, as defined by the Sebi from time to time, to carry out Bankers to an Issue (BTI) operations in addition to the scheduled banks.

A scheduled bank or such other banking firm as Sebi may specify, carrying out operations such as accepting application money, accepting allotment or call money, refunding application money, and paying dividends or interest warrants is referred to as a banker to an issue.