SEBI Proposes Unique UPI System to Combat Fraud in Securities Market

The capital market regulator, the Securities and Exchange Board of India (SEBI) is working on a new system to ensure secure and efficient payments in the securities market via the Unified Payments Interface (UPI). This initiative aims to help differentiate legitimate financial intermediaries from fraudsters.

As part of the proposed system, SEBI plans to create a unique UPI address for registered market intermediaries, making it easier for investors to verify that they are paying only authorized entities. The proposed daily UPI payment limit for capital market transactions will be increased to ₹5 lakh, up from the current ₹2 lakh. This limit will be reviewed periodically in collaboration with the National Payments Corporation of India (NPCI).

SEBI released a consultation paper on the proposals on Friday, inviting public feedback by February 21.

Since 2019, SEBI has permitted UPI as a payment method in the market, but there has been an increasing problem with unregistered entities misleading investors and fraudulently collecting money. To address this, SEBI proposes assigning a unique alphanumeric UPI ID to each registered intermediary.

“This unique UPI address will help investors ensure that payments are made only to registered intermediaries. It will also allow investors to identify and avoid unregistered entities, who won’t have access to this specific UPI handle,” SEBI said.

Additionally, a “thumbs-up” icon inside a green triangle will appear when payments are made to verified intermediaries. If the icon is absent, it will serve as a warning to investors about the potential risks of paying unauthorised entities. The cost of implementing this system is expected to be minimal, as it will involve collaboration between SEBI, NPCI, banks, and registered intermediaries.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.