Syllabus

GS 3: Indian Economy 

Context: 

The Securities and Exchange Board of India (SEBI) is set to introduce a structured Unified Payment Interface (UPI) address system for its registered intermediaries.

More on the News:

• This advancement is aimed at curbing the growing presence of unregistered entities that mislead investors in the stock market.

• The move is aimed at streamlining the fund collection process by intermediaries and helping investors identify legitimate SEBI-registered entities before making payments. 

• To support this, SEBI is also developing a tool called ‘SEBI Check’ that will allow verification of UPI IDs and bank details of registered intermediaries. 

• Both the structured UPI system and the verification tool are expected to be launched by October 1, 2025.

• SEBI has made it mandatory for all registered intermediaries to obtain the new UPI IDs. 

• They are also required to inform investors about the new handle and ensure it is offered as one of the available payment options.

• For investors, using the structured UPI handle will be optional. They can choose their preferred mode of payment—such as UPI, Immediate Payment Service (IMPS), National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), or cheques. 

• However, if an investor chooses to pay via UPI, they must use only the new UPI IDs assigned to SEBI-registered intermediaries.

What is New verified UPI payment mechanism

• The validated UPI handle will be given only by the National Payments Corporation of India (NPCI) and used only by SEBI-registered intermediaries to collect payments. 

• NPCI is the main organization that manages retail payment and settlement systems in India. It also owns and runs the UPI platform. 
• UPI is a mobile-based payment system that works 24/7 and allows users to send and receive money instantly using a Virtual Payment Address (VPA) created by the user.

• Under the new mechanism, SEBI stated that the UPI username will consist of a readable name selected by the intermediary and followed by a mandatory suffix that indicates their category.

• For example, a stock broker will use the suffix “.brk”, while a mutual fund will use “.mf”.

• The verified UPI handle will include a unique identifier, “@valid”, along with the name of the self-certified syndicate bank. 

• For instance, a registered broker named ABC Ltd with an account at XYZ Bank would have a UPI ID like: “abc.brk@validXYZ”.

• To help investors easily identify legitimate transactions, a clear visual cue a "thumbs-up inside a green triangle" icon will appear when making payments to registered intermediaries using the new UPI handle.

• From October 1, 2025, intermediaries will no longer be allowed to accept payments through their existing UPI IDs. 

• However, to avoid any disruption, the current mode of fund transfer for ongoing mutual fund Systematic Investment Plans (SIPs) will continue. 

• For all new SIPs, as well as renewals or extensions of existing ones, payments must be made using the newly assigned UPI IDs.

About “SEBI Check” Tool

• To enhance security and help investors verify the authenticity of entities before making any financial transactions, SEBI is developing a tool called “SEBI Check”.

• This functionality will allow investors to verify UPI IDs by either scanning a QR code or entering the UPI ID manually. 

• Additionally, the tool will enable confirmation of an intermediary’s bank details, such as the “Bank account number” and “Indian Financial System Code (IFSC)”.

• The Sebi said the system is currently in development and will be available for use by common investors with effect from October 1, 2025.

About Securities and Exchange Board of India (SEBI):

• Headquarters: Mumbai

• SEBI started in April 1988 as a non statutory body and replaced the Controller of Capital Issues, which functioned under the Capital Issues Act,1947.

• It became a statutory regulator in January 1992 based on the SEBI Act, 1992.

• Its primary objective includes 

• Protect investor interests.
• Promote development of securities markets.
• Regulate the securities market effectively

• Board composition (9 members):

• Government-nominated Chairperson.
• 2 members from the Finance Ministry.
• 1 member nominated by RBI.
• 5 Government-appointed members (≥3 whole-time)

Mains practise Question

In light of rising financial frauds and unregistered entities in the securities market, critically examine SEBI’s initiative to introduce structured UPI handles and the ‘SEBI Check’ verification tool.