Move to help check misuse of funds;Firms can use modes approved by Reserve Bank of India
Indian Stock Market regulator SEBI (The Securities and Exchange Board of India) has asked all listed companies to use electronic mode for making cash payments to investors,a move that would help check misuse of funds.
SEBI in a circular said that listed companies can utilise electronic payment modes approved by the Reserve Bank of India (RBI) 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 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 SEBI ,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.
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