SEBI Proposes Secure UPI Payment Mechanism for Market Intermediaries
The Securities and Exchange Board of India (SEBI) is working on a secure Unified Payments Interface (UPI) system specifically for registered market intermediaries. This initiative is designed to improve investor security, prevent fraudulent transactions, and guarantee that payments are made solely to authorized intermediaries. SEBI’s proposal comes as unregistered entities increasingly mislead investors and collect funds fraudulently.
How will SEBI’s proposed UPI payment mechanism improve security?
SEBI plans to introduce a unique alphanumeric UPI ID for each registered market intermediary. This ID will help investors verify the legitimacy of intermediaries before making payments. In addition, a verification icon—a “thumbs-up” symbol inside a green triangle—will appear when payments are made to verified entities. If this icon is missing, investors will know that they may be dealing with an unregistered intermediary.
This approach will help minimize fraud by guaranteeing that payments are directed solely to intermediaries registered with SEBI. SEBI’s initiative is in line with its overarching objective of enhancing investor protection and improving market transparency.
What changes will SEBI make to UPI transaction limits?
Currently, UPI transactions in the capital markets are limited to ₹2 lakh per day. SEBI is suggesting an increase of this limit to ₹5 lakh per day, enabling investors to conduct higher-value transactions with greater security. This change will be carried out in partnership with the National Payments Corporation of India (NPCI), which manages the UPI system. The new limit will be assessed regularly to ensure it aligns with market demands.
By raising the transaction limit, SEBI aims to facilitate smoother and safer fund transfers within the securities market. This change is particularly important for high-value transactions in stock trading, mutual fund investments, and other capital market activities.
Why is SEBI introducing these changes now?
Since 2019, SEBI has permitted UPI payments in the securities market. However, fraudulent activities by unregistered entities have been rising. These entities often collect funds from investors under false pretenses. SEBI’s proposal to introduce a unique UPI ID and verification system is a response to these risks.
By implementing this secure UPI mechanism, SEBI seeks to protect investors, reduce fraud, and enhance trust in digital transactions. The regulatory body has invited public comments on the proposal until February 21, 2025, allowing stakeholders to share their views before implementation.