Description

SEBI directive requiring registered intermediaries to adopt standardized, validated and exclusive UPI IDs for collecting payments from investors to enhance security and prevent fraud.

Summary

SEBI has mandated that all registered intermediaries must adopt standardised, validated and exclusive UPI IDs for collecting payments from investors. This directive aims to enhance the security of payment collection processes and prevent fraudulent activities by ensuring that only verified and dedicated UPI IDs are used for investor transactions.

Key Points

  • All SEBI registered intermediaries must implement standardised UPI ID formats for payment collection
  • UPI IDs must be validated and registered with the intermediary’s official records
  • Exclusive UPI IDs should be maintained specifically for investor payment collections
  • This measure enhances investor protection and reduces the risk of payment fraud
  • Intermediaries need to update their payment systems and processes to comply

Regulatory Changes

SEBI has introduced new requirements for payment collection mechanisms:

  • Mandatory adoption of standardised UPI ID naming conventions
  • Validation requirements for all UPI IDs used for investor payment collection
  • Exclusive use of dedicated UPI IDs (not to be shared with other business purposes)
  • Enhanced security protocols for payment processing

Compliance Requirements

  • SEBI registered intermediaries (brokers, investment advisors, portfolio managers, etc.) must implement standardised UPI IDs
  • Existing UPI IDs must be validated and updated to meet the new standards
  • Payment collection systems must be configured to accept only validated UPI IDs
  • Intermediaries must maintain proper records of validated UPI IDs
  • Communication to investors about the official UPI IDs to be used for payments

Important Dates

  • Circular Date: October 20, 2025
  • Implementation timeline to be specified by SEBI or immediately effective

Impact Assessment

High Impact on Market Intermediaries:

  • Requires technical changes to payment collection systems
  • Need for UPI ID validation and registration processes
  • Operational updates to ensure exclusive use of validated UPI IDs
  • Enhanced investor communication regarding official payment channels

Positive Impact on Investor Protection:

  • Reduces risk of payment fraud through unofficial channels
  • Provides clear identification of legitimate payment collection points
  • Enhances transparency in payment processes
  • Strengthens overall security of financial transactions in the securities market

Impact Justification

Mandatory compliance requirement for all SEBI registered intermediaries affecting payment collection processes, requiring system changes and validation procedures to enhance investor safety