Archive · 18 Sep 2026
RBI Retail Direct UPI MDR Liability Remains Unclear
RBI Retail Direct lets people buy government securities directly without using a broker.
They can use UPI to send the money.
A new rule sets a small payment charge for capital-market transactions from 15 October.
The charge is 0.02% of the investment, with a maximum of ₹300.
Experts disagree about who must pay this charge.
One view is that investors may have to pay applicable payment gateway charges.
Another view is that MDR is normally handled within the payment system and should not automatically be charged to investors.
The final answer depends on the agreements between the RBI and the payment companies involved.
A new framework sets UPI MDR for capital-market transactions at 0.02% of transaction value, capped at ₹300, from 15 October.
Experts disagree on whether applicable payment gateway charges in RBI Retail Direct transactions are borne by investors or payment-system participants.
RBI Retail Direct provides direct access to government securities without requiring a broker or charging account-maintenance fees.
Investors can use UPI to fund purchases of T-bills, government securities, State Development Loans and other eligible instruments.
Experts say the final MDR responsibility depends on the contractual and payment arrangements among the RBI, banks and payment-system entities.
- Who
- Retail investors, the Reserve Bank of India, banks and payment-system participants are involved.
- What
- The issue is who will bear UPI Merchant Discount Rate charges for RBI Retail Direct investments.
- When
- The new MDR framework takes effect on 15 October; the year is not specified.
- Where
- The transactions occur through the RBI Retail Direct platform using UPI, including primary issuances and the NDS-OM secondary market.
- Why
- Capital-market UPI transactions will attract an MDR, but the applicable arrangements do not clearly establish which participant must bear it.
Investor May Bear Applicable Gateway Charges
MDR May Remain Within Payment Arrangements
Who pays the charge?
Investor May Bear Applicable Gateway Charges
Ayush Jindal said RBI Retail Direct is fee-free as a brokerage service, but the RBI states that applicable payment gateway charges are borne by the investor.
MDR May Remain Within Payment Arrangements
Shams Tabrej said the absence of an account fee does not determine who bears payment-processing costs, and the MDR should not automatically be treated as an investor-facing fee.
Can MDR be passed to investors?
Investor May Bear Applicable Gateway Charges
Investors may have to bear applicable payment gateway charges under the Retail Direct terms.
MDR May Remain Within Payment Arrangements
Adhil Shetty said the MDR cannot be passed on to the investor, while Tabrej said its treatment depends on the applicable contractual and payment-system arrangements.
Role of transaction classification
Investor May Bear Applicable Gateway Charges
For NDS-OM transactions, the applicable MDR is determined by how the transaction is classified under the new UPI framework.
MDR May Remain Within Payment Arrangements
Without relevant contractual or payment-system documentation, experts said it is premature to conclusively identify the participant responsible for the MDR.
- MDR rate
- 0.02% of the transaction value
- MDR cap
- ₹300 per transaction
- Effective date
- 15 October
- Account fees
- No fee is charged for opening or maintaining a Retail Direct Gilt account
- Eligible investments
- Treasury Bills, central government dated securities, State Development Loans, Sovereign Gold Bonds and Floating Rate Savings Bonds
- Payment method
- UPI can be used for payments, including fund-blocking and transfer facilities in primary auctions
- Secondary market
- NDS-OM is used for trading securities that have already been issued