August 5, 2026 at 11:04 AM 2 min readindiadeveloping
RBI Governor Discusses UPI MDR and Plastic Notes Rollout
Digital Payments Cost:
Reserve Bank of India Governor Sanjay Malhotra addressed proposed Merchant Discount Rate levies on Unified Payments Interface transactions exceeding ₹2,000, emphasizing that funding the digital infrastructure requires sustainable cost allocation. While peer-to-peer transfers remain exempt, notified business transactions may attract a small fee between 0.25% and 0.4%.
Polymer Currency Plan:
The central bank outlined preparations to introduce India's inaugural plastic currency notes in the ₹10 and ₹20 denominations by April 2027. Bharatiya Reserve Bank Note Mudran Pvt. Ltd. floated a global tender for specialized polymer substrates to execute field trials on notes designed to outlast traditional paper currency.
Foreign Inflows Outlook:
Financial institution HSBC projected potential foreign institutional inflows reaching $25 billion if global emerging market funds rebalance their current underweight allocations toward Indian equities. Robust corporate earnings reports and resilient macroeconomic fundamentals continue to underpin investor confidence.
Pulse Intelligence
Context & ImpactContext & Background
- The Indian digital payments ecosystem experienced exponential transaction growth under zero merchant discount rate policies.
- Foreign institutional investors shifted capital allocations toward artificial intelligence markets across international exchanges over preceding quarters.
Key Consequences
- Payment service providers and commercial banks will establish technical frameworks for potential merchant transaction fee collections.
- Field trials for polymer currency notes will commence across designated regions ahead of the planned April 2027 rollout.
Market & Economic Impact
Foreign institutional inflows could accelerate significantly if global funds restore neutral allocations toward Indian equities.
The Indus Pulse is committed to accuracy and transparency.