Sebi Proposes New Mechanism to Ensure Secure and Efficient Payments in Securities Market

The Securities and Exchange Board of India (Sebi) is looking to introduce a new mechanism to ensure secure and efficient payments in the securities market through the Unified Payments Interface (UPI). The proposed mechanism aims to distinguish legitimate financial intermediaries from fraudsters and reinforce investor confidence in the digital ecosystem.

Key Features of the Proposed Mechanism

The proposed UPI payment limit for capital market transactions is set to Rs 5 lakh per day, higher than the current Rs 2 lakh limit. This will be evaluated periodically in consultation with the National Payments Corporation of India (NPCI). To address the growing issue of unregistered entities misleading investors and collecting money fraudulently, Sebi has proposed creating a unique alphanumeric UPI ID for each registered intermediary.

Benefits of the Proposed Mechanism

The unique UPI address will help investors ensure that their payments are reaching only to registered intermediaries. As a corollary, this would also help investors identify, isolate, and avoid unregistered entities, who will not have access to this unique UPI handle. A special "thumbs-up" icon inside a green triangle will appear when payments are made to verified intermediaries. If the icon is missing, it will warn investors about potential risks of paying unauthorised entities.

Implementation and Costs

The costs of implementing this system are expected to be low, as the process involves collaboration between Sebi, NPCI, banks, and registered intermediaries. This initiative is being discussed with various stakeholders, including the NPCI. Sebi chairperson Madhabi Puri Buch has emphasized the importance of marrying technology with trust, saying that this new step would help distinguish legitimate financial intermediaries from fraudsters and reinforce investor confidence in the digital ecosystem.

Timeline

The Securities and Exchange Board of India (Sebi) has floated a consultation paper on the proposals and sought public comments on them by February 21. Since 2019, Sebi has enabled UPI as a mode of payment in the market. However, there has been a growing issue with unregistered entities misleading investors and collecting money fraudulently.

Conclusion

The proposed mechanism aims to ensure secure and efficient payments in the securities market through the Unified Payments Interface (UPI). The unique UPI address will help investors ensure that their payments are reaching only to registered intermediaries, and the special "thumbs-up" icon will provide an additional layer of security. With the collaboration of various stakeholders, including the NPCI, this initiative is expected to be implemented soon.

Published On Feb 3, 2025 at 11:36 AM IST

Category Most Read Placement

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