The Securities and Exchange Board of India (SEBI) is taking significant steps to protect investors from fraud in the digital age with its new UPI verification tools. These tools, "Validated UPI Handles" and "SEBI Check," are designed to ensure that investors' payments are secure and routed through legitimate channels. This move comes in response to the increasing number of instances where fraudsters impersonate brokers or mutual funds to deceive investors.

Validated UPI Handles

Under the new system, all intermediaries registered with SEBI who collect funds from investors are required to adopt UPI addresses with the suffix "@valid". Category-specific extensions such as ".brk" for brokers or ".mf" for mutual funds will also be mandatory. For example, a validated UPI handle for a broker would be abc.brk@validhdfc, while a mutual fund's handle could be xyz.mf@validicici. Only banks listed as self-certified syndicate banks can issue these "@valid" handles.

Payments made via these "@valid" handles will feature a visual cue – a "thumbs-up inside a green triangle" icon – to signal authenticity to users. This helps investors to instantly detect and avoid fraudulent activities if the icon is absent during UPI transactions.

SEBI Check

SEBI is also launching a tool called "SEBI Check" to further assist investors. This tool allows investors to independently verify UPI IDs, bank account numbers, and IFSC codes of intermediaries. Investors can confirm the authenticity of a bank account by entering either the account number and the IFSC code or the @valid UPI ID. It is accessible through the SEBI Check portal, the SEBI Saarthi app, or through the SEBI website. SEBI advises investors to use SEBI Check before making any payments to ensure that the funds are being transferred to legitimate, registered entities.

The Need for Reform

SEBI's move comes amid rising incidents of fraudsters impersonating brokers or mutual funds to siphon money from unsuspecting investors. In recent months, there have been multiple reports of investors being lured into transferring funds to fake UPI accounts that masquerade as legitimate intermediaries. The new measures are aimed at combating impersonation by unregistered entities and ensuring that investors transfer money only to verified intermediaries.

Benefits of the New System

• Assured Security: Payments will be routed exclusively through verified SEBI-registered intermediaries, reducing the risk of fraud and misdirection.
• Fraud Prevention: Investors can instantly detect and avoid fraudulent activities when the exclusive “thumbs-up” visual cue is absent in UPI transactions.
• Enhanced Transparency: The new system enhances transparency in investor payments.
• Investor Empowerment: SEBI has highlighted verification protocols, encouraging investors to check SEBI registration & authenticity.

Implementation and Challenges

The new UPI payment mechanism is being implemented from October 1, 2025. SEBI is giving intermediaries time until December 8 to switch to the new verified UPI IDs, after which the old UPI IDs will be discontinued. While over 90% of investors' brokers and all mutual funds have already adopted the "@valid" scheme, many smaller intermediaries and regional entities may lag. For many intermediaries, the shift will require back-end upgrades, including issuing new handles, updating QR codes, and ensuring real-time feed of verification status across UPI apps and investor platforms.

One potential challenge is that investors may not always scrutinize handles or icons closely, especially in smaller-value or routine transactions. If a fraudulent intermediary manages to falsely secure a “@valid” handle or replicate the icon, the safeguards could be undermined.

SEBI’s Broader Efforts to Combat Fraud

The introduction of validated UPI handles and the SEBI Check tool are part of SEBI's broader efforts to protect investors from fraud. SEBI has also launched a joint investor awareness campaign titled "SEBI vs SCAM" in collaboration with key Market Infrastructure Institutions (MIIs) and the Association of Mutual Funds in India (AMFI). The campaign aims to raise investor awareness by highlighting common fraud tactics and warning signs. SEBI is also set to introduce a searchable online registry of verified social media handles for all registered intermediaries.

The Future of Investing with UPI

UPI's widespread adoption has simplified funding demat accounts and purchasing stocks or mutual funds. By allowing familiar payment methods like UPI, SEBI is encouraging more retail investors to enter the market. While UPI enhances convenience, cybersecurity remains a concern, and investors must use secure platforms and avoid sharing sensitive details.

Conclusion

SEBI's new UPI verification tools are a welcome step towards creating a safer and more secure investment environment for Indian investors. By making it easier for investors to verify the legitimacy of market intermediaries, SEBI is empowering them to make informed decisions and protect themselves from fraud.