Archive · 18 Sep 2026
SEBI Reviews Brokers’ Concerns Over New UPI MDR Charges
SEBI is the regulator that oversees India’s securities markets.
It plans to study brokers’ worries about new UPI fees.
Starting October 15, certain payments to brokers will have a fee of 0.02%, up to ₹300 per transaction.
Brokers may be charged when customers add money to their trading accounts.
However, customers may never use that money to buy or sell investments.
This means brokers could pay fees without earning brokerage income.
Money that is not used must also be returned to customers at prescribed intervals.
Customers may then transfer the money back, causing another fee.
Zerodha’s Nithin Kamath supports a broader UPI fee system but wants a smaller maximum charge for broking payments.
SEBI Chairman Tuhin Kanta Pandey said the regulator will examine brokers’ concerns about the new UPI MDR framework.
From October 15, capital-market UPI payments to brokers and dealers will carry a 0.02% MDR, capped at ₹300 per transaction.
Brokers say they could incur charges when clients transfer funds into trading accounts without placing trades.
Zerodha CEO Nithin Kamath backed the broader MDR framework but called for a lower cap on broking-related UPI payments.
Brokers also cite quarterly or monthly returns of unused client funds, which can lead to repeated UPI charges without additional brokerage revenue.
- Who
- SEBI Chairman Tuhin Kanta Pandey, stockbrokers, brokerage firms, and Zerodha CEO Nithin Kamath.
- What
- SEBI will examine concerns about how the revised UPI Merchant Discount Rate framework applies to stockbroking payments.
- When
- Pandey spoke on Thursday; the revised UPI MDR framework is scheduled to take effect on October 15.
- Where
- Pandey made the comments on the sidelines of the NaBFID Infrastructure Conclave 2026 in Mumbai.
- Why
- Brokers say they may face UPI costs on client fund transfers that do not lead to trades, including repeated transfers linked to the return of unused funds.
Brokers’ concerns
MDR framework rationale
Fees on non-trading transfers
Brokers’ concerns
Brokers say they may pay MDR when clients transfer money into trading accounts but do not trade, creating costs without corresponding brokerage revenue.
MDR framework rationale
The framework applies MDR to specified UPI payment movements and is intended to establish a sustainable revenue framework for digital payments.
Size of the charge
Brokers’ concerns
Brokers argue that charging on the full fund transfer can greatly exceed the brokerage earned, particularly for low-cost or zero-brokerage trades, and want a lower cap or other changes.
MDR framework rationale
The capital-market MDR is set at 0.02%, substantially below the 0.4% rate for specified person-to-merchant transactions above ₹2,000, with a ₹300 cap.
Treatment of brokers
Brokers’ concerns
Brokers and the BSE Brokers’ Forum argue that brokers are largely pass-through entities because client funds are sent to clearing corporations for margins and settlement, so charging on the entire flow is misplaced.
MDR framework rationale
The existing framework treats payments to brokers and other capital-market entities as covered transactions, while SEBI has said it will examine the concerns and consider how to ease them.
- Regulator
- Securities and Exchange Board of India (SEBI)
- Capital-market MDR
- 0.02% on specified UPI payments to brokers and other capital-market entities
- Maximum capital-market charge
- ₹300 per transaction
- Other specified UPI payments
- A 0.4% charge applies to specified person-to-merchant transactions above ₹2,000
- Effective date
- October 15
- Main broker concern
- Fees may apply when clients transfer funds but do not execute trades
- Additional concern
- Returning unused funds and receiving them again may create repeated charges without additional brokerage revenue
- Suggested change
- Nithin Kamath proposed a lower cap for broking-related UPI payments
Sources
SEBI to look into stockbrokers' concerns over UPI MDR framework: Chairman
UPI MDR framework: Sebi to examine brokers’ concerns over trading account costs - Telegraph India
SEBI To Review Stockbrokers’ Concerns Over New UPI MDR Charges On Market Transactions: Tuhin Kanta Pandey
