In a bid to safeguard retail investors from cyber frauds, the Securities and Exchange Board of India (SEBI) has mandated a new structured unified payment interface (UPI) address mechanism for all registered intermediaries who collect funds from investors.
The new mechanism, which will go live from October 1, will provide investors the option to transfer funds directly to the requisite bank accounts of intermediaries that have been validated with SEBI, assuring investors of their payment being made to verified intermediaries.
The move comes amid rising concerns about cyber frauds in digital transactions, particularly UPI-based payments. “There is a lot of public concern regarding cyber fraud. We have to find systemic solutions to it. We have 130 million unique investors now, and we need a system in the securities market where they invest through a system where they know they are investing at the right place,” SEBI chairman Tuhin Kanta Pandey said.
Valid UPI IDs
The UPI address of intermediaries will use a unique and easily relatable handle “@valid”, combined with the name of the self-certified syndicate banks, to make it easy for investors to identify. For the payments made through such a UPI handle, a “thumbs-up inside a green triangle” would be made available to investors, the absence of which should alert investors of the risk.
The markets regulator will soon issue a circular detailing the operational process, following which banks and intermediaries will make the required system changes. NCPI will allocate the UPI handles IDs to banks.
Further, SEBI is also developing a tool called “SEBI check” to provide an additional layer of security and help investors verify the authenticity of an entity before proceeding with any financial transaction.
This will allow investors to verify the authenticity of UPI IDs either by scanning a QR code or entering the UPI ID manually and confirming the bank details, such as the account number and India Financial System Code (IFSC) of a registered intermediary.