Reserve Bank of India (RBI) Governor Sanjay Malhotra on Wednesday said that levying a small fee in the form of MDR (Merchant Discount Rate) on UPI transactions will not significantly affect UPI transaction volumes. “As of now, we do not see any drop in volumes. And I don’t personally think that a small fee will have a major impact on the volumes,” he told reporters at the central bank headquarters.
UPI transactions above Rs 2,000 will attract 0.4 per centย MDR
The National Payments Corporation of India (NPCI) has announced a 0.4 per cent MDR on UPI transactions above Rs 2,000 made to business UPI accounts. Merchants will be charged this fee. Sanjay Malhotra said bank loan growth will remain strong and continue to support broader economic activity.ย
Speaking to reporters hours after announcing a rate hike and making it clear that a rate cut is off the table, Malhotra said banks’ credit growth will remain strong and continue to support broader economic activity.
NBFCs facing adverse impact on asset quality amid excess liquidity
The RBI Governor said the RBI is aware of the negative impact on NBFC asset quality amid excess liquidity. However, he clarified that the central bank does not anticipate such a situation. He added that while banks have seen excess liquidity in the past few weeks, it will not last long.ย
USD 133 billion came from the FCNR(B) scheme
Sanjay Malhotra also stated that the collection of approximately USD 133 billion in deposits from non-resident Indians under the concessional swap facility reflects the strength of the FCNR(B) scheme and the country’s broader economic fundamentals. According to the RBI Governor, the central bank is confident that banks will use this amount prudently. Malhotra said global challenges have reduced capital flows and that pressure on the current account is temporary.
The balance of payments will soon return to a surplus state
He expressed confidence that the balance of payments will soon return to a surplus position. Malhotra did not respond to a question regarding the RBI’s rejection of Tata Sons’ request to surrender its NBFC license and asking the holding company of the country’s largest business group to list on the stock exchanges to comply with upper-tier NBFC regulations.
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