Sebi introduces new system for secure payments in securities market using UPI

The Securities and Exchange Board of India (Sebi) is introducing a new system to ensure secure and efficient payments in the securities market using Unified Payments Interface (UPI). This move aims to differentiate legitimate financial intermediaries from fraudulent entities.

Under this proposed mechanism, Sebi plans to assign a unique UPI address to registered market intermediaries. This initiative will make it easier for investors to verify the authenticity of the recipients before making payments. In a consultation paper released by the market regulator, public comments have been invited on these proposed measures until February 21. Sebi has allowed the use of UPI as a payment mode in the market since 2019.

To enhance security, Sebi has suggested increasing the UPI payment limit for capital market transactions to Rs 5 lakh per day, up from the current limit of Rs 2 lakh. This limit will be subject to periodic evaluation in coordination with the National Payments Corporation of India (NPCI). Sebi has observed a rising concern regarding unregistered entities deceiving investors and illicitly collecting funds.

To counter this issue, Sebi proposes assigning a unique alphanumeric UPI ID to each registered intermediary. This distinct UPI address will assist investors in ensuring that their payments are directed only towards registered intermediaries. Moreover, it will enable investors to identify and steer clear of unregistered entities who do not possess access to this unique UPI handle. Once the new system is implemented, a special thumbs-up icon inside a green triangle will signify verified intermediaries when payments are completed.

On the other hand, the absence of this icon will serve as a warning to investors about the potential risks associated with unauthorized entities. The successful execution of this system requires collaboration between Sebi, NPCI, banks, and registered intermediaries to ensure its efficiency and accuracy in verifying payment recipients.

In conclusion, Sebi’s initiative to implement a new mechanism using UPI aims to bolster the security and credibility of financial transactions in the securities market. By introducing unique UPI addresses for registered intermediaries and setting higher payment limits, Sebi intends to safeguard investors from fraudulent activities. This system will not only enhance the overall security of financial transactions but also streamline the process of verifying legitimate payment recipients.