The Reserve Bank of India has raised concerns about the long-term sustainability of free digital transactions. RBI Governor Sanjay Malhotra has said that the government’s continued subsidising of the Unified Payments Interface may not be viable in the future.
Speaking at a recent event, Malhotra highlighted that while UPI remains a powerful and inclusive tool for digital payments, it currently runs without any user charges only because the government is covering the costs for banks and other participants. “Payments and money are a lifeline,” he said. “We need a universally efficient system. As of now, there are no charges. The government is subsidising various players such as banks and other stakeholders in the UPI payments system. Obviously, some costs have to be paid.”
He emphasised that even though India is committed to ensuring safe and easy access to digital payments & UPI , it is important to address the financial burden of maintaining such a system. “Costs will have to be paid. Someone will have to bear the cost,” he added.
Malhotra’s remarks come at a time when UPI usage has seen a huge increase. Daily transactions have doubled over the past two years, rising from 31 crore to more than 60 crore. This UPI rapid growth has added to the overall subsidy load.
He also pointed out that any decision regarding the continuation of the zero merchant discount rate policy will rest with the government.
On the topic of banking sector reforms, Malhotra said that the earlier mergers of public sector banks have shown positive outcomes. However, he added that any future consolidation will be considered only if it proves to be economically beneficial.
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