Sebi Proposes Secure UPI Payments for Market Intermediaries

New Delhi, Jan 31 (PTI) Markets regulator Sebi on Friday proposed a new mechanism to ensure secure and efficient payments in the securities market through Unified Payments Interface (UPI).

Under this, the regulator has suggested creating a unique UPI address for registered market intermediaries, making it easier for investors to confirm that they are paying only registered entities, according to its consultation paper.

The proposed UPI payment limit for capital market transactions is set at Rs 5 lakh per day, higher than the current Rs 2 lakh limit. This will be evaluated periodically in consultation with NPCI.

The Securities and Exchange Board of India (Sebi) has sought public comments on the proposals by February 21.

Since 2019, Sebi has enabled UPI, as a mode of payment in the market.

However, there has been a growing issue of unregistered entities misleading investors and collecting money fraudulently.

To address this, Sebi has proposed creating a unique alphanumeric UPI ID for each registered intermediary.

"This unique UPI address will help investors ensure that their payments are reaching only to registered intermediaries. As a corollary, this would also help investors identify, isolate and avoid unregistered entities, who will not have access to this unique UPI handle," Sebi said.

Further, a special "thumbs-up" icon inside a green triangle will appear when payments are made to verified intermediaries. If the icon is missing, it will warn investors about the potential risks of paying unauthorised entities.

The costs of implementing this system are expected to be low, as the process involves collaboration between Sebi, NPCI, banks, and registered intermediaries.

This initiative is being discussed with various stakeholders, including the National Payments Corporation of India (NPCI).

Earlier in the day, Sebi chairperson Madhabi Puri Buch, in an event organised by ICAI, explained about the proposed "Pay Right" initiative.

This initiative will enable investors to verify the authenticity of the UPI ID they are transferring money to through robust KYC (Know Your Customer) due diligence. This measure is designed to combat the growing threat of digital fraud, ensuring that investors can confidently confirm they are making payments to legitimate recipients.

Buch emphasised the importance of marrying technology with trust, saying that this new step would help distinguish legitimate financial intermediaries from fraudsters and reinforce investor confidence in the digital ecosystem.