SEBI Advocates Electronic Payments For Dividends And Interest By Listed Entities

Market regulator SEBI on Friday proposed that all listed entities should exclusively use electronic methods for making payments, including dividends, interest, and redemptions.

It has sought public comments on the proposal till Oct. 11.

This initiative aims to streamline payment processes and improve security, convenience, and efficiency for all investors.

In its consultation paper, the Securities and Exchange Board of India has proposed making all payments, including dividends and interest, in electronic form for both demat and physical security holders.

Currently, SEBI's Listing Obligations and Disclosure Requirements allow electronic payments but also permit companies to issue cheques or warrants if electronic transfers fail, particularly for amounts exceeding Rs 1,500.

Such failures often occur due to incorrect or unavailable bank details from the security holders, prompting companies to resort to cheque payments. Recent data indicates that 1.29% of electronic dividend payments made by the top 200 listed companies fail, according to SEBI.

Investors would be encouraged to update their correct bank details with depository participants to ensure smooth payments.

SEBI has highlighted several benefits of electronic payments, like faster and more convenient than cheques, reduction of risk of loss in transit, being environmentally friendly as it reduces paper usage, lower administrative costs for companies, making tracking easier for investors, and helping minimise errors.

(With Inputs From PTI)