Sebi Proposes Only Electronic Payments for Dividends and Interest: A Game-Changer for Investors

On Friday, the markets regulator Sebi proposed that all listed companies should make payments like dividends, interest, and redemptions only through electronic methods. This plan aims to simplify the payment process and make it more secure, convenient, and efficient for all investors.

Currently, Sebi’s Listing Obligations and Disclosure Requirements (LODR) rules allow electronic payments but still permit cheques if electronic transfers fail, especially for amounts over ₹1,500. Failures can happen if a shareholder’s bank details are incorrect or unavailable, leading companies to send cheques instead. According to Sebi, about 1.29% of electronic dividend payments fail for the top 200 listed companies.

In its consultation paper, Sebi suggested that all payments, including dividends and interest, should be made electronically for both demat and physical securityholders. Investors are encouraged to update their correct bank details with their depository participants to ensure smooth payments.

Sebi highlighted several advantages of electronic payments: they are faster and more convenient than cheques, reduce the risk of loss during delivery, are better for the environment by using less paper, lower administrative costs for companies, make it easier for investors to track payments, and help reduce errors. Sebi is asking for public feedback on this proposal until October 11.