Sebi asks cos to use electronic mode for making cash payments
Mumbai: Market regulator Sebi has asked all listed companies to use electronic mode for making cash payments to investors, a move that would help check misuse of funds.
The Securities and Exchange Board of India in a circular said that listed companies can utilise electronic payment modes approved by the Reserve Bank for cash payments.
To ensure cash payments are done through the electronic mode, companies are required to keep bank account details of investors.
Electronic Clearing Service (ECS), National Electronic Clearance Service (NECS) and National Electronic Fund Transfer (NEFT) are among the payment systems approved by the RBI.
The circular, which would help in ensuring more transparency in market dealings, is aimed at curbing misuse of investor funds.
"For investors that hold securities in demat mode, companies or their RTI (Registrar to the Issue) and STA (Share Transfer Agent) shall seek relevant bank details from the depositories," the circular said.
In case of investors holding physical share or debenture certificates, the listed firms have been directed to take necessary steps to "maintain updated bank details of the investors".
According to the market regulator, companies can opt for physical payment instruments for paying cash to the investors if there are problems in electronic mode such as those related to MICR (Magnetic Ink Character Recognition) and IFSC (Indian Financial System Code).
"Companies shall mandatorily print the bank account details of the investors on such payment instruments," it said.
Sebi has also asked stock exchanges to bring the circular to the notice of all listed companies.