SEBI Introduces UPI Security Feature To Combat Broker Fraud, Zerodha CEO Nithin Kamath Welcomes Move

The Securities and Exchange Board of India (SEBI) has rolled out a new UPI security feature aimed at preventing fraudulent transactions involving impersonator brokers. Zerodha CEO Nithin Kamath has endorsed the initiative, highlighting its potential to reduce financial scams and enhance investor protection.  

Key Highlights Of The New UPI Security Framework  

- SEBI’s latest directive mandates that all registered intermediaries, including stockbrokers, mutual funds, and portfolio managers, use validated UPI handles for fund transfers  
- Each intermediary will be assigned a standardized UPI ID, consisting of a username and a unique handle, ensuring transparency in transactions  
- Verified UPI handles will be marked with a distinctive “thumbs-up inside a green triangle” symbol, helping investors identify legitimate payment channels  
- SEBI is developing a tool called Sebi Check, allowing investors to verify UPI IDs manually or by scanning QR codes before making transactions  

Industry Response And Kamath’s Endorsement  

- Kamath has raised concerns about the rising number of fraud cases involving scammers posing as brokers and soliciting payments to unverified accounts  
- He emphasized that the new security feature will ensure that all legitimate fund transfers occur only through verified UPI handles, reducing the risk of financial fraud  
- Zerodha has confirmed plans to implement the new framework soon, aligning with SEBI’s October 1, 2025 deadline for compliance  

Market Impact And Investor Protection  

- The initiative is expected to improve the safety and accessibility of financial transactions within the securities market  
- SEBI anticipates that approximately 8,000 intermediaries will transition to the new UPI framework by the implementation deadline  
- The Rs 5 lakh per day transaction cap for capital market payments via UPI will remain unchanged, ensuring controlled fund movement  

Future Outlook  

With SEBI’s new UPI security feature, investors can expect a more secure and transparent payment system, reducing the likelihood of scams. The initiative marks a significant step toward strengthening financial security in India’s capital markets.  

Sources: Economic Times, MSN, Republic World, SEBI Press Release.