SEBI Introduces New UPI Payment Mechanism for Investors
The Securities and Exchange Board of India (SEBI) is set to implement a new Unified Payment Interface (UPI) address mechanism by October 1, 2025. This initiative aims to protect investors from unregistered entities in the stock market. The new system will allow investors to easily identify legitimate SEBI-registered intermediaries before making payments.
Background of the Initiative
Unregistered entities have increasingly misled investors, collecting funds without proper authorisation. This has led to financial losses for many individuals. SEBI’s new UPI mechanism is a proactive response to these fraudulent activities. It aims to enhance investor confidence and ensure safer transactions in the securities market.
Structure of the New UPI Mechanism
The new UPI addresses will feature a unique identifier, @valid. This identifier will be combined with the intermediary’s name and a suffix that denotes their category. For example, a stock broker would have a suffix of ‘.brk’, while a mutual fund would use ‘.mf’. This structure is designed to help investors easily identify legitimate intermediaries.
Benefits of the New UPI IDs
The introduction of validated UPI IDs will improve transaction safety. Investors will have a clear visual cue—a thumbs-up inside a green triangle icon—when making payments to registered intermediaries. This visual indicator aims to prevent impersonation and fraudulent activities.
Mandatory Compliance for Intermediaries
All registered intermediaries are required to adopt the new UPI IDs. They must inform investors about this new payment option and ensure it is offered as a primary payment method. Existing UPI IDs will no longer be accepted after the implementation date.
Investor Payment Options
While the new UPI handle is mandatory for intermediaries, its use remains optional for investors. They can still choose from various payment methods, including Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), and Real Time Gross Settlement (RTGS). However, if they opt for UPI, they must use the new validated IDs.
The SEBI Check Tool
To enhance security, SEBI is developing a tool called ‘SEBI Check’. This tool will enable investors to verify the authenticity of UPI IDs by scanning a QR code or entering the ID manually. It will also confirm bank details, such as account numbers and IFSC codes, providing an additional layer of protection for investors.
Timeline for Implementation
The SEBI Check tool and the new UPI IDs are currently under development. Both will be available to investors starting October 1, 2025. This timeline allows for a smooth transition and ensures that investors are well-informed about the changes.
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