SEBI is planning to introduce a new mechanism to ensure secure and efficient payments in the securities market using Unified Payments Interface (UPI) to differentiate between legitimate financial intermediaries and fraudsters.
The regulator has proposed creating a unique UPI address for registered market intermediaries, making it easier for investors to verify that they are paying only registered entities. The proposed UPI payment limit for capital market transactions is set at ₹5 lakh per day, higher than the current limit of ₹2 lakh. This limit will be reviewed periodically in consultation with the National Payments Corporation of India (NPCI).
SEBI has issued a consultation paper on these proposals and has invited public comments by February 21. Since 2019, UPI has been enabled as a payment mode in the market, but there have been cases of unregistered entities deceiving investors and fraudulently collecting money.
To tackle this issue, SEBI has suggested creating a unique alphanumeric UPI ID for each registered intermediary. This unique UPI address will help investors ensure that their payments are going to registered intermediaries only. Additionally, a special “thumbs-up” icon inside a green triangle will appear when payments are made to verified intermediaries, providing a warning to investors if the icon is missing.
The implementation costs of this system are expected to be minimal, as it involves collaboration between SEBI, NPCI, banks, and registered intermediaries. The initiative is being discussed with various stakeholders, including the NPCI.
SEBI’s proposed “Pay Right” initiative aims to allow investors to verify the authenticity of the UPI ID they are transferring money to through rigorous KYC due diligence. This measure is intended to combat digital fraud and ensure that investors can confidently make payments to legitimate recipients.
SEBI Chairperson Madhabi Puri Buch emphasized the importance of combining technology with trust to distinguish legitimate financial intermediaries from fraudsters and boost investor confidence in the digital ecosystem. The proposed mechanisms aim to provide a safe and secure payment environment for investors in the securities market.
