UPI MDR apprehension unlikely to spur higher cash usage: RBI DG Murmu
Distilled Policy Brief
- RBI Deputy Governor Shirish Chandra Murmu stated that introducing a Merchant Discount Rate (MDR) will not lead to a surge in cash usage, noting it is merely an initial apprehension.
- Murmu clarified that there is no paradox between rising digital transactions and cash in circulation, as cash functions simultaneously as a transaction medium and a store of value.
🎯 Prelims High-Yield Examination Points
Merchant Discount Rate (MDR) on UPI is capped at Rs 300 for transactions of Rs 75,000 or more, paid by merchants and not consumers.
⚖️ Mains Analytical & Syllabus Linkages
Examine the regulatory approach of the RBI toward digital payments, balancing compliance burdens, principle-based regulations, and emerging technologies like artificial intelligence.
🎯 UPSC Prelims Practice Drill
With reference to the recent statements by the Reserve Bank of India (RBI) regarding digital payments and currency, consider the following statements: 1. A Merchant Discount Rate (MDR) of 0.4 percent is applicable to all peer-to-peer (P2P) UPI payments irrespective of the transaction value. 2. According to the RBI, the simultaneous rise in digital transactions and cash in circulation presents a paradox because cash functions exclusively as a transaction medium rather than a store of value. Which of the statements given above is/are correct?
- [A] 1 only
- [B] 2 only
- [C] Both 1 and 2
- [D] Neither 1 nor 2
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is incorrect because payments between individuals (P2P) remain free; the 0.4 per cent MDR applies to person-to-merchant (P2M) UPI payments above Rs 2,000. Statement 2 is incorrect because the RBI clarified that there is no paradox between rising digital transactions and cash in circulation, noting that cash functions simultaneously as a transaction medium and a store of value.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.