RBI backs MDR on large-value UPI transactions, says could help expand UPI acceptance
The Reserve Bank of India (RBI) has publicly supported the implementation of Merchant Discount Rate (MDR) on large-value UPI transactions. This move is intended to ensure the long-term financial sustainability and growth of India's digital payments ecosystem. The new provisions will apply MDR to person-to-merchant transactions exceeding ₹2,000, with smaller merchant payments and all person-to-person transfers remaining free of charge. The central bank views this as crucial for the continued expansion and robustness of UPI infrastructure.
Why it matters
This official endorsement from the RBI signifies a strategic shift towards monetizing the UPI ecosystem to fund its operational and technological advancements, moving away from a completely free model for certain transaction types. It aims to balance user convenience with the financial health of payment service providers and banks.
The Economic Times · Wed, 16 September 2026
Read more →Indian Rupee hits 3-month low as Brent crude surges and US bond yields breach 5%
The Indian rupee reached its weakest point in three months on Tuesday, with the USD/INR closing at 95.99. This depreciation was driven by a significant surge in Brent crude oil prices, which climbed past $108 per barrel, and US 10-year bond yields breaching the critical 5% mark. The Reserve Bank of India reportedly intervened by selling dollars to cushion the rupee's fall. Market participants indicate that the rupee's trajectory will largely depend on evolving crude oil prices and the upcoming US Federal Reserve's policy decisions.
Why it matters
A weakening rupee increases import costs, particularly for crude oil, exacerbating inflationary pressures in India. This could necessitate a more hawkish stance from the RBI in upcoming MPC meetings to manage imported inflation and maintain financial stability. Forex departments will face increased volatility.
The Economic Times · Wed, 16 September 2026
Read more →Analysts expect RBI to hike rates by 25 bps each in Oct, Dec policy meetings
Analysts are increasingly forecasting a total of 50 basis points (bps) in repo rate hikes by the Reserve Bank of India (RBI) across its October and December policy meetings. This expectation follows recent official data indicating that consumer price inflation rose to 4.82% in August from 4.45% in July. The upward pressure on inflation, coupled with surging crude oil prices and rising global interest rates, is compelling the RBI to consider further monetary tightening to anchor inflation expectations.
Why it matters
This signals a likely shift in the RBI's monetary policy stance towards hawkishness, implying higher borrowing costs for banks and their customers. Banks should review their lending and deposit rate strategies in anticipation of these potential rate adjustments.
The Hindu BusinessLine · Wed, 16 September 2026
Read more →AU Small Finance Bank bolsters leadership ahead of universal bank transition
AU Small Finance Bank has appointed two new senior executives, Anil Agarwal and Amol Padhye, to its leadership team. These appointments are part of the bank's strategic expansion plans and come ahead of its anticipated transition into a universal bank. AU Small Finance Bank recently received in-principle approval from the Reserve Bank of India for this transition, which it is required to complete within an eighteen-month timeframe. The bolstering of the leadership team aims to enhance operational capabilities and risk management.
Why it matters
This strategic hiring indicates AU SFB's proactive approach to meeting the expanded regulatory and operational requirements of a universal bank. For other SFBs considering a similar transition, it highlights the importance of strengthening governance and management structures well in advance.
The Economic Times · Wed, 16 September 2026
Read more →Foreign investors pull Rs 5,109 cr from govt bonds in 3 days amid global uncertainty
Foreign portfolio investors (FPIs) have withdrawn over Rs 5,109 crore from Indian government securities (G-Secs) within just three days. This significant capital outflow is attributed to growing global uncertainties, the declining Indian rupee, surging crude oil prices, and rising US Treasury yields. These factors collectively diminish the attractiveness of Indian sovereign debt for foreign investors, leading to capital flight from emerging markets, including India.
Why it matters
FPI outflows from G-Secs can put upward pressure on domestic bond yields, increasing the government's borrowing costs and potentially impacting corporate bond markets. This liquidity drain could also influence RBI's open market operations and liquidity management strategies.
The Economic Times · Wed, 16 September 2026
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