Key Highlights

• Verified UPI handles ending with “@valid” ensure payments go only to SEBI-registered intermediaries.
• “SEBI Check” tool allows investors to scan QR codes or enter UPI ID to verify authenticity'.

India's markets regulator announced a mandatory shift to a new Unified Payments Interface (UPI) mechanism for all registered intermediaries collecting funds from investors, in an effort to reduce fraud and improve the safety of financial transactions in the securities market.

Tuhin Kanta Pandey, Chairman of the Securities and Exchange Board of India (Sebi), announced at a press briefing that the new system will go into effect on October 1.

"This innovative mechanism has the potential to significantly improve the safety and accessibility of financial transactions in the securities market by providing a verified and secure payment channel," Pandey stated.

New UPI handle and verification tool

The directive requires Sebi-registered intermediaries to use validated UPI addresses that are specifically designed for investor transactions. These UPI IDs must be clearly communicated to investors and made available as a mandatory payment option; however, investors may still use other payment methods such as IMPS, NEFT, RTGS, or cheque.

To increase investor awareness and prevent impersonation, Sebi is developing a new feature known as "Sebi Check," which will allow investors to verify the authenticity of UPI IDs. Users can verify a registered intermediary's details by scanning a QR code or manually entering the UPI ID, which will reveal associated bank account numbers and IFSC codes.

The new handles will enable investors to send up to Rs 5 lakh per day to verified intermediaries.

Combating cyber fraud and fake applications

The move comes amid an increase in cyber fraud, such as the use of fake apps and phishing links impersonating legitimate brokers. According to Pandey, many investors have been duped by deceptive apps, including those promoted on WhatsApp or other similar-looking platforms.

"People are investing money thinking that they are actually dealing with registered brokers, but they are not," Pandey explained. "A huge amount of money has been lost this way."

Pandey explained that the regulator is working with app marketplaces to ensure that only verified applications are displayed. Sebi has already whitelisted broker apps hosted on official exchange websites, and it is working with Google Play and Apple App Store to improve vetting.

Existing systematic investment plans (SIPs) with current UPI IDs will continue to be valid to avoid disruptions to ongoing mutual fund investments. However, new SIPs, as well as renewals and extensions, will have to follow the newly mandated UPI structure.

Also Read: UPI Transactions Over Rs 3,000 May Incur Additional Charges

QR codes and awareness campaigns

Sebi is also requiring intermediaries to create QR codes with a distinct "thumbs-up" logo that will be linked to verified UPI IDs. Scanning these codes provides investors with a secure and reliable payment method.

Pandey said the Sebi will launch investor protection campaigns over the next two years, with a focus on cybersecurity and fraud prevention.

"We currently have 130 million unique investors, and many new investors are entering the market," he said. "We needed a system that would allow people to be confident that they were investing through the appropriate channel."

The move to a secure UPI infrastructure comes after the Sebi issued a consultation paper on the subject in January.