Sebi mandates new UPI mechanism for registered intermediaries to enhance investor safety

Mumbai: Markets regulator Sebi on Wednesday said 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, 2025, Sebi chief Tuhin Kanta Pandey told reporters here.

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, the Securities and Exchange Board of India (Sebi) floated a consultation paper in this regard.

The Sebi chief said that there is a lot of public concern and many people are becoming prey to fraud, cyber frauds in which a lot of cloning of apps happen.

People are taken to some similar-looking apps of the brokers or through WhatsApp, and the people then are investing in that money thinking that they are actually investing with the registered brokers but they are actually not. They are being just taken to this and a huge amount of money many people have lost, he said.

"... we have to find out some systemic solutions to it because we have 130 million unique investors now and a lot of new investors are coming and we needed a system where at least in the securities market the people are investing they should invest through a method where they are able to know systemically whether they are really investing in the right one," Pandey said.

According to the market regulator, the validated payment handle will be available to all investors to transfer up to Rs 5-lakh per day to their respective registered intermediaries.

Sebi also said that this mechanism ensures that the investors are equipped with the right tools and information to make decisions, adding that we are sure that now investors would be able to identify and approach Sebi-registered intermediaries for their investment requirements.

Also while it is mandatory for all intermediaries to secure these UPI IDs and they also need to make investors aware of the new handle and mandatorily offer it as one of the payment options to them, the investor can choose their preferred mode of payment such as UPI, IMPS, NEFT, RTGS or cheques, as per the market regulator.

Besides this, the new UPI IDs are only for intermediaries to obtain while investors can continue to use their existing UPI IDs.

Pandey further said that Sebi has already taken some of the steps including whitelisting apps, which are already there on exchange sites, going forward it will be working with the PlayStore and iOS and Android to see that only properly validated apps are only displayed, and that work of verified status is on is on.

According to the market regulator, the intermediaries will have to stop accepting payments using the current UPI IDs post the specified deadline.

While the existing mode of fund transfer for ongoing Mutual Fund SIPs will continue to remain in force to avoid disruption, the new SIPs and renewal and extension of existing SIPs must be done using UPI IDs only.

It is also mandatory, as per Sebi, to generate QR codes with the "thumbs-up" logo for the convenience of investors, as scanning of QR codes is more secure and reliable.

" (over) the next two years we will have coordinated investor protection campaigns on basic themes, and one of the first themes will be cyber security, prevention of cyber frauds, investing safe, and providing a safe space," he said.