MUMBAI: With increasing incidents of investors getting defrauded by unscrupulous elements, the regulator Sebi is developing a digital shield to protect investors, using an NPCI-verified UPI Id for each market participant and bank. The new tool called “Valid” will be launched from October 1, which, along with the tool “Sebi Check”, will validate payment authenticity.
By October 1, all market makers who number around 9,000 will have to roll out this feature on their trading platforms, Sebi chairman Tuhin Kanta Pandey told reporters here Wednesday.
"We have roped in the NPCI for the tool and the corporation will be creating unique Ids for each bank, which can be verified on the Sebi Check," he added.
Through Sebi’s payment mechanism ‘@Valid’, all market intermediaries will be able to use it to collect funds from clients through the UPI app, benefiting brokers, mutual funds, research analysts, investment advisers, and other market intermediaries, he added.
Sebi had introduced the UPI as a mode of payment in the market for the first time in 2019. The successful experience and efficiency brought in by the UPI resulted in its inclusion in various other processes as well. Sebi has fixed an upper limit of Rs 5 lakh/day for fund transactions done through UPI.
Market intermediaries will now have a unique UPI address to collect funds from clients, with Sebi unveiling the 'Valid' mechanism. The development comes after incorporating industry feedback following consultations, and after assessing the readiness of market participants.
Asked whether from October all demat account holders and mutual fund investors will have to adopt this tool, Pandey said the new tool is meant for only those fund transaction done through the UPI and not through bank accounts to demat accounts. But for those entering the mutual fund and SIPs from October, they have the option to verify the veracity of the bank details.
‘Valid’ is a unique, unified payments interface (UPI)-based payment ID which will be developed by the NPCI for each bank and issued only to Sebi-registered entities.
Such unique IDs will include the handle name ‘@valid’ combined with the bank name to ensure easy identification by investors. A 'green thumbs up' icon in a triangle will also be marked to show the legitimacy of the transaction, Pandey said.
For example, if it is for a broker ABC, and money is to be collected through the UPI platform of HDFC Bank, then the handle will be abc.brk@validhdfc. Similarly, for a mutual fund, it will be abc.mf@validhdfc.
Sebi had already launched 'Sebi Check' through which investors will be able to check and authenticate the bank account UPI ID of registered intermediaries, either by scanning a QR code or by entering the UPI ID.
Explaining the rationale for the move, Pandey said over the years, many unregistered entities misled investors by unauthorized collection of money, which is mostly siphoned off for their personal gains. Hence, it felt a need to proactively restrict proliferation of unregistered entities, thereby enabling investors to identify a Sebi-registered intermediary and make requisite payments to them in a more convenient and efficient as well as legitimate way.