Blitz Bureau
Market regulator Securities and Exchange Board of India (Sebi) has announced that it has mandated a new UPI payment mechanism for all registered intermediaries, who collect funds from investors, to improve the safety and accessibility of financial transactions within the securities market.
The Unified Payments Interface (UPI) payment mechanism will go live from October 1, Sebi Chief Tuhin Kanta Pandey told reporters in Mumbai.
In recent years, unregistered entities have increasingly misled investors by fraudulent activities. To address the issue of impersonation and enhance investor confidence, the regulator has mandated a new UPI address structure for all Sebi-registered intermediaries who collect funds from investors.
“This innovative mechanism is set to significantly improve the safety and accessibility of financial transactions within the securities market by providing a verified and secure payment channel,” Pandey said.
To empower investors, the market regulator is developing a new functionality called “Sebi Check”.
This upcoming tool will enable investors to verify the authenticity of UPI IDs either by scanning a QR code or entering the UPI ID manually and confirming the bank details, such as the account number and India Financial System Code (IFSC) of a registered intermediary. In January, Sebi had floated a consultation paper in this regard.
Starting 1 October, about 8,000 intermediaries registered with Sebi must use verified UPI IDs that are standardised, issued via validated bank handles (like @validhdfc) and displayed along with a green triangle and thumbs-up icon to confirm legitimacy, according to a circular.
While investors can still choose other options (NEFT, IMPS, etc.), those using UPI will need to use the new verified IDs.
According to Pandey, the regulator’s goal is to reduce payment frauds in securities transactions, assure investors that payments are going to verified entities, and standardise payment collection across market intermediaries
All intermediary associations and stakeholders had been duly consulted along with the NPCI (National Payments Corporation of India) and Self-Certified Syndicate Banks (SCSBs), he said in an interaction with the media.
Each intermediary will get a unique UPI ID based on a username (e.g. abc.brk for a broker) and a handle issued by a verified bank (e.g. @validhdfc)
Sebi member Ananth Narayan G said it will be up to the investors to ensure they verify UPI IDs and bank details of the intermediaries through “Sebi Check” feature – a database for investors that will be launched shortly.
Pandey said 8,000 investor-facing intermediaries who will be impacted by the circular will get time till 8 December, after which the old UPI IDs will be discontinued.
Sebi’s June 11 circular clarified that only banks listed as self-certified syndicate banks can issue these @valid handles.
Pandey said Sebi will plan investor education programmes across the country for the next two years to make investors aware about cybersecurity and cyberfrauds. “Sebi has the budget, means and intention to do it and we will carry it out.”