No Charges on UPI Yet: RBI Governor Confirms Free Transactions for Now

In Parliament, the Finance Ministry Clarified That There is No Immediate Plan to Impose UPI Transaction Charges

In a major relief for digital payment users across India, Reserve Bank of India (RBI) Governor Sanjay Malhotra has confirmed that there are currently no plans to levy any fees on UPI transactions. The move ensures continued seamless and cost-free payments on one of the nation’s most widely used platforms.

What RBI Guv Told about UPI Transactions?

During the monetary policy statement in New Delhi, the RBI governor quoted, “There is no proposal to levy any charge on UPI transactions.”

The RBI governor’s statement came amid renewed speculation about the sustainability of UPI’s zero-cost model. He previously said that “there are costs (associated with UPI transactions), and they need to be paid for by someone,” and acknowledged that “UPI may not stay free forever.” However, today he emphasized that no changes are being introduced now.

To promote digital payment across the nation, UPI has long been a free platform. However, the Payment and Settlement Systems Act and related guidelines currently prohibit charging fees from users or merchants for UPI transactions.

In parliament earlier this year, the finance ministry also clarified there is no current plan to impose UPI transaction charges, responding to public concern after earlier comments.

Governor on India’s Economic Outlook

Governor Malhotra expressed his confidence in India’s economic outlook, highlighting a “very high growth trajectory” alongside a “commitment to maintaining price stability”.

With an impressive growth of 6.8%, predicted by the central bank in the current fiscal year, India is expected to be among the fastest-growing major economies this year.

Malhotra previously said that growth is strong but below the "aspirations" of nearly 8%.

Announcing the fourth bi-monthly monetary policy review, Malhotra further said it is proposed to “provide an enabling framework for Indian banks to finance acquisitions by Indian corporates, thereby expanding the scope of capital market lending by banks”.

RBI Keeps Repo Rate Unchanged

The Reserve Bank of India (RBI) kept its key repo rate unchanged at 5.50%, in line with market expectations, as it evaluates the impact of earlier rate cuts and recent tax reductions amid global trade uncertainties.

The central bank had cut the repo rate by a total of 100 basis points in the first half of 2025, but paused at its previous meeting in August. The six-member rate-setting panel voted unanimously to keep the key repo rate at 5.50% and decided to continue with a "neutral" policy stance.

A Ray of Hope

The Indian economy grew at a stronger-than-expected 7.8% in the April-June quarter from a year earlier. The RBI expects inflation in the current financial year to come in at 2.6%, lower than its previous estimate of 3.1%.

Malhotra said, “The outlook on inflation has turned more benign due to lower food prices and tax rate cuts. The growth outlook remains resilient”.

“To be sure, tariff-related development is likely to decelerate growth in the second half of the fiscal year, but GST and other reforms will offset the impact of external factors on economic growth to some extent,” the RBI governor said.

“The Reserve Bank will remain vigilant towards incoming macroeconomic data for deciding the next course of action,” Malhotra added.

Tariffs VS GST Reduction: Will the Indian Economy Find Balance?

The Monetary Policy Committee is currently seeking a balance among competing priorities like subdued inflation and growth risks from US President Donald Trump’s 50% tariffs on one side, and the rupee’s record slide on the other. The rupee is down 3.6% against the dollar this year, the worst among Asian emerging nations, following newly imposed tariffs by the US President.

“The rationalisation of GST will have a sobering impact on inflation, while stimulating consumption and growth,” Malhotra said.

With an expectation of easing inflation, the government has removed GST rates. How will it influence the Indian economy? Only time will tell.