Instant Rejection of IPO Applications for Insufficient Bank Balance

GP Chudal
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Instant Rejection of IPO Applications for Insufficient Bank Balance

In a significant development in the world of Initial Public Offerings (IPOs) in Nepal, IPO applications will now face immediate rejection if the applicant’s bank account lacks the required funds. This is a game-changing move that aims to streamline the IPO application process, prevent false applications, and ensure transparency in the financial market.

The Securities Board of Nepal (SEBON) recently granted approval for the integration of CDSC’s (CDS and Clearing Limited) API procedures, marking a pivotal moment in Nepal’s financial landscape. With this approval, ASBA member banks that have installed CDSC’s API will now be able to implement real-time checks on applicants’ bank account balances during the IPO application process.

The traditional IPO application process had a significant flaw: applicants could submit applications even if their bank accounts had insufficient funds. It was only during the verification process that the system would check the availability of funds, leading to delays and potential complications. This flaw allowed for false IPO applications, which not only disrupted the IPO process but also eroded trust in the financial system.

Now, with the approval of CDSC’s API procedures, this issue has been effectively addressed. When an applicant submits an IPO application, the system will instantly verify the availability of funds in their bank account. If the account lacks the required balance, the system will promptly notify the applicant and reject the IPO application. This real-time verification ensures that only genuine and financially capable applicants proceed with their IPO submissions.

Suresh Neupane, the Information Officer of CDS and Clearing Limited, expressed the significance of this development. He mentioned that the approval from the SEBON has paved the way for implementing real-time bank balance checks during IPO applications. In the past, the system would accept applications without verifying the bank account balance, only to reject them later during verification. This led to confusion and inefficiencies in the IPO process.

Additionally, this move allows CDSC to charge a fee to the companies or service providers that connect to the API. This fee structure will help sustain the system and ensure its smooth operation.

One of the key advantages of this system is that it provides real-time data. As soon as the API is connected, applicants can access accurate information about the balance in their bank accounts. This not only simplifies the IPO application process but also enhances transparency and trust in Nepal’s financial market.

In conclusion, the recent approval of CDSC’s API procedures by SEBON marks a significant step toward improving the IPO application process in Nepal. The introduction of real-time bank balance checks ensures that IPO applications are submitted by financially capable individuals or entities. This move is expected to reduce false applications, streamline the IPO process, and enhance overall transparency in the financial market.

For more details on this development and its implications, you can refer to the following official sources:
SEBON’s Approval of CDSC’s API Procedures
CDSC’s Role in Enhancing IPO Verification

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