SEBI has introduced comprehensive requirements for digital fee collection by portfolio managers. This article explains the UPI and digital payment framework, mandatory requirements, and compliance timelines.
The Regulatory Framework
UPI ID Mandate
SEBI has mandated that all SEBI-registered portfolio managers must obtain at least one UPI ID. This requirement ensures secure and verified payment collection from investors.
CeFCoM Platform
CeFCoM (Centralized Fee Collection Mechanism) is a SEBI initiative to eliminate payment to unregistered entities by differentiating unregistered entities from SEBI registered entities. Under this mechanism, clients pay fees to registered investment advisers and portfolio managers through a designated platform administered by the exchange.
Payment Modes
Through CeFCoM, investors can make payments using multiple modes:
- Net Banking
- UPI/UPI Autopay
- Debit/Credit Cards
- IMPS/NEFT/RTGS
- eNACH
- Cheque
UPI ID Requirements
Mandatory UPI ID
The Regulator has mandated that all SEBI-registered PMS must obtain at least one UPI ID.
Suggested Best Practice
It has been suggested and recommended that UPI IDs be created for all investor-facing accounts where the money is being received from the investors.
UPI ID Format
The UPI ID should properly show the name of the intermediary, followed by the short abbreviation of their category, for example, "PMS" for portfolio manager, to the left of the "@" character.
Validation
UPI IDs must be validated and exclusive. They must carry a clear segment tag like .mf for mutual funds, .brk for brokers.
CeFCoM Platform Features
Investor Authentication
Investors can authenticate UPI IDs either by:
- Scanning a QR code
- Manually entering the UPI ID
Bank Verification
For bank verification, investors can confirm the bank account number and Indian Financial System Code (IFSC) of a registered intermediary.
Verification Tool
This tool enables investors to verify the authenticity of UPI handles and bank account details before making payments.
Compliance Timelines
Activity Timeline
Considering T as the date of issuance of the SEBI circular, the activity-wise timelines are:
| Activity | Start | End |
|---|---|---|
| Self-certified syndicate banks to approach SEBI | T Day | T + 30 Days |
| Necessary changes by MIIs in their portal | T Day | T + 60 Days |
| Testing by MIIs | T + 60 Days | T + 75 Days |
| Allocation of UPI IDs by banks | T + 90 Days | NA |
| Obtaining "@valid" UPI handle | T + 90 Days | T + 105 Days |
| Discontinuation of use of old UPI IDs | NA | T + 180 Days |
Effective Date
Starting 1 October 2025, every SEBI-registered intermediary like mutual funds, brokers, portfolio managers, and distributors, must collect money only through a validated UPI handle ending with @valid.
Compliance Requirements
Mandatory for All
It is mandatory for all intermediaries including Portfolio Managers to obtain these UPI IDs.
Investor Awareness
Investor awareness for the use of New UPI IDs must be conducted by various entities (i.e., MIIs, AMFI, RTAs, MFs, Intermediaries and their associations) starting T + 120 Days.
Expert Legal Guidance
Anuj Desai & Associates provides expert legal advisory services on digital fee collection compliance for portfolio managers. Our securities law experts help clients implement UPI IDs, integrate with CeFCoM, and ensure regulatory compliance. Contact us for guidance on digital fee collection and other regulatory matters.