SEBI to Launch 'SEBI Check' to Validate UPI Handles and Enhance Investor Safety

In a significant move to bolster digital security and investor protection, the Securities and Exchange Board of India (SEBI) has announced the rollout of a new feature titled ‘SEBI Check’, aimed at verifying the legitimacy of Unified Payments Interface (UPI) payment handles. The initiative, a first of its kind in India’s capital markets ecosystem, is poised to address the growing concerns around online payment frauds in public issues and other investment transactions.

A Step Towards Digital Transparency

The SEBI Check feature will allow investors to confirm whether a UPI ID used in an Initial Public Offering (IPO), New Fund Offer (NFO), or any capital market-related transaction is linked to a registered market intermediary. By enabling this real-time verification, SEBI aims to curb incidents of UPI fraud, which have been on the rise amid increased digitization of investment processes.

A SEBI official familiar with the development noted, “With the surge in digital payments and the reliance on UPI in IPO applications, it is imperative that we create a verification mechanism to prevent fraud and reassure investors. SEBI Check is our step in that direction.”

Addressing the Rise in UPI Scams

According to recent data from the National Payments Corporation of India (NPCI), UPI transactions crossed 11.4 billion in May 2025, signaling its mainstream acceptance. However, this growth has also attracted cybercriminals who often impersonate brokers, registrars, or depositories and mislead investors into transferring funds to fake UPI IDs.

Commenting on the issue, cybersecurity analyst Aditya Joshi of SafePayTech said, “The lack of a built-in validation mechanism in UPI has created vulnerabilities for retail investors. SEBI’s tool can serve as a much-needed filter, especially for first-time investors in IPOs.”

How ‘SEBI Check’ Will Work

The verification facility will be hosted on SEBI’s official website and will later be integrated into platforms of registered market participants, such as stockbrokers, banks, and RTA (Registrar and Transfer Agents) systems. Here’s how it will work:

• Step 1: Investors enter the UPI ID they have been asked to pay through.

• Step 2: SEBI Check runs the ID against its database of approved merchant UPI handles.

• Step 3: A confirmation or red-flag is generated, showing if the ID is legitimate.

SEBI has clarified that the database will be dynamically updated in coordination with banks, the NPCI, and regulated intermediaries. The tool will initially focus on IPOs and may later extend to mutual funds and secondary market trades.

A Boost for Retail Investor Confidence

Retail participation in Indian stock markets has increased significantly, particularly through direct equity purchases and mutual fund SIPs. The recent LIC IPO saw nearly 70% of applications routed via UPI. While this highlights digital adoption, it also exposes the system to cyber fraud.

Market analyst Siddharth Sharma, from QuantEdge Research, stated, “This initiative from SEBI is timely. The IPO market has seen a flood of interest from retail investors who may not always verify payment sources. A government-backed verification step will reduce hesitation and build long-term trust.”

Industry Welcomes the Move

Brokers and financial platforms have largely welcomed the step. Zerodha, one of India’s leading brokerage firms, in a post on X (formerly Twitter), wrote: “A much-needed feature. Validating UPI handles will reduce phishing attempts and accidental fund transfers. Kudos to SEBI for being proactive.”

Similarly, fintech startup founders have urged SEBI to consider integrating the feature with UPI apps like PhonePe, Paytm, Google Pay, and BHIM to make verification frictionless at the point of transaction.

Investor Outlook: Safety First

For investors, especially those new to markets, the SEBI Check tool is poised to become a vital step in ensuring that their hard-earned money goes to the right place. Experts suggest that while SEBI’s move is commendable, investor awareness will play a critical role in the tool’s effectiveness.

Investor education consultant Meenal Desai remarked, “Tools are only as good as their adoption. SEBI should ensure this feature is promoted via public campaigns and onboarding instructions on IPO platforms.”

In line with this, SEBI is also expected to launch a digital awareness drive in partnership with exchanges, AMCs, and investor protection funds.

SEBI’s decision to launch ‘SEBI Check’ is a proactive response to the evolving digital investment landscape. As financial markets become more democratized and digital-first, ensuring the security of transactions becomes essential to sustaining growth and investor confidence.

With its focus on fraud prevention and payment transparency, SEBI Check could set a new standard for regulatory tech in India’s financial ecosystem, potentially inspiring similar tools in other segments of digital finance.