Sebi on Wednesday announced plans to introduce valid UPI identities for registered intermediaries and a tool for investors to verify the authenticity of such IDs before investing. The move aims. to curb instances of financial fraud in the capital markets amid a growing unique investor base.
The regulator said the system, which will come into effect from October, will allow all investors to identify, isolate and avoid unregistered entities while also ensuring that their payments are reaching only registered intermediaries.
Sebi said it is cognizant of instances where, through similar-looking applications of brokerages or through WhatsApp, people are being misled into thinking that they are investing with registered brokers and are losing money in the process.
“We had to find out systemic solutions. There are around 130 million unique investors now, and a lot of new investors are coming. We need a system where, at least in the securities market, investors should be able to know systemically whether they are investing in the right one (intermediary),” said Sebi chairman Tuhin Kanta Pandey.
Pandey said that going forward, Sebi will also be working with Apple and Google to ensure that only verified apps are listed on the app stores. “That work is on,” he said.
UPI ID structure
Sebi, in its circular released on Wednesday, outlined the structure that will allow investors to identify the valid UPI IDs of registered intermediaries.
Citing examples, Sebi said the UPI ID linked to an HDFC Bank account of a registered broker called abc will read as abc.bkr@validhdfc. The UPI ID linked to an HDFC Bank account of a registered mutual fund called xyz will read as xyz.mf@validhdfc.
Moreover, for payments made to registered market intermediaries through valid UPI handles, an icon of a thumbs-up inside a green triangle will be available.
Transaction limits
UPI currently has a maximum transaction limit of ₹5 lakh per day for capital market transactions.
“Based on our analysis and available limits on transaction amount through UPI, the upper limit of ₹5 lakh per day for capital market transactions (done through UPI) shall be available, subject to periodic review and further evaluation as necessary,” Sebi said in its circular.
Verification
To further empower investors, the market regulator is also developing a new tool called “Sebi Check” that will enable investors to verify the authenticity of UPI IDs of intermediaries.
“This tool will also include a feature to confirm the bank details such as bank account number and Indian Financial System Code (IFSC) of an intermediary,” the circular said.
Back in January, Sebi had floated a consultation paper on Safe and Efficient transfer on UPI, where it had observed that following the success of the UPI, many unregistered entities have misled investors by unauthorised collection of money, which is mostly siphoned off for personal gains.
Allaying industry concerns, Sebi said that for investors, particularly those who invest in mutual funds through SIPs, the transition will be seamless as adequate time will be given for the transition.
