Moreover, stock brokers have been barred from receiving cash deposits in their bank accounts from the clients.
Meanwhile, Sebi is planning to introduce an alternative payment mechanism in initial public offers for retail investors as it aims to speed up the listing process.
“In view of the various modes of payment through electronic means available today, it is directed that Stock Brokers shall not accept cash from their clients either directly or by way of cash deposit to the bank account of stock broker,” Sebi said in a circular on Thursday.
The circular added that all the payments will only be received or made by the stock brokers from or to the clients strictly by account payee crossed cheques or demand drafts or by way of direct credit into the bank account through electronic fund transfer, or any other mode permitted by the Reserve Bank of India.
“The stock brokers shall accept cheques drawn only by the clients and also issue cheques in favour of the clients only, for their transactions. Stock Brokers shall not accept cash from their clients either directly or by way of cash deposit to the bank account of stock broker,” Sebi said.