Newsbreak Confirmed: SEBI launches initiative to enable D-Street investors to make UPI payments to intermediaries securely

Market regulator Securities and Exchange Board of India (SEBI) on Wednesday rolled out a special initiative to help investors make UPI payments to stockbrokers and other intermediaries securely. This facility—aimed at protecting investors against fraudulent activities—has been designed specifically to ensure that money is transferred only to the intended and registered intermediaries, such as brokers. The development confirms a Zee Business exclusive report this week that such an initiative was on the cards.

The market regulator's decision, to put in place a structured UPI address mechanism for registered investor-facing intermediaries to collect funds from their investors, comes in light of significant advancements in payment systems and with an aim to enhance securities market accessibility and safety, according to an official release. 

According to SEBI, the "standardised, validated and exclusive UPI IDs" will be available for investors with effect from October 1.

What will the dedicated UPI handle do? How will it work?

The mechanism will provide investors with the option to make digital payments directly to the intermediaries' bank accounts already validated with SEBI.

Through this mechanism, investors' payments will go only to the verified and registered market intermediaries. 

The initiative has been introduced after thorough public consultation and detailed deliberations with relevant stakeholders including the National Payments Corporation of India (NPCI), an umbrella organisation for operating retail payments and settlement systems in the country. 

The use of this mechanism will be optional for investors, it will be compulsory for intermediaries to provide the UPI address to their investors. 

SEBI has asked intermediaries to actively promote and facilitate the adoption of this mechanism to their investors.

SEBI Rolls Out Structured UPI Address | The operational procedure

SEBI shared a flowchart outlining the end-to-end process involved in the rollout of the dedicated UPI handle mechanism.

Image source: SEBI 

What will SEBI-registered intermediaries' UPI addresses look like? See examples

Intermediaries will select "readable and relatable" usernames followed by an abbreviation representing their segment. For example, intermediaries can have usernames "abc.brk" or "abc.mf" for operating as a broker and a mutual fund, respectively.

Suffixes for various intermediary types

Their UPI addresses will contain unique and easily relatable handles, like “@valid”, to be used in combination with the names of self-certified syndicate banks as mentioned below:

Take a look at examples of complete handles

Here are two sample handles, one each for a registered broker and a registered MF: 

• abc.bkr@validhdfc
• xyz.mf@validhdfc