The government will organise the two-day ‘PSB Confluence’ ideation conclave on August 17-18 to foster dialogue and exchange best practices among the leadership of Public Sector Banks (PSBs) and Public Financial Institutions (PFIs), even as Parliament has approved the Taxation and other Laws (Amendment) Bill, with Finance Minister Nirmala Sitharaman clarifying that the legislation does not impose any tax or transaction charge on users making payments through the Unified Payments Interface (UPI).
The PSB Confluence, to be held in the presence of Finance Minister Nirmala Sitharaman and Minister of State for Finance Pankaj Chaudhary, will bring together nearly 125 participants, including Chairmen, Managing Directors and Executive Directors of PSBs and PFIs such as NABARD, EXIM Bank, SIDBI, NHB, IIFCL, IFCI and NaBFID.
According to the Finance Ministry, the confluence aims to chart actionable and time-bound strategies with a strong focus on people-centric outcomes. It will provide a platform for participating institutions to brainstorm on identified themes, share proven practices and discuss practical initiatives that can be adopted across the banking ecosystem.
The discussions will focus on strengthening the resource base for affordable credit, facilitating the investment cycle for timely execution of infrastructure projects, developing capability centre ecosystems, strengthening rural value-chain infrastructure, expanding priority sector lending to underserved segments and designing banking products to meet the needs of the youth.
The thematic tracks will cover Deposit Mobilisation, Banking for Youth, Supporting the Investment Cycle, Supporting Global Capability Centres, Agriculture & Horticulture Value Chain Infrastructure, Re-imagining the Credit Card Business and Priority Sector Lending.
Meanwhile, Parliament on Monday approved the Taxation and other Laws (Amendment) Bill, with Sitharaman making it clear that the legislation does not impose any tax or transaction charge on UPI users.
The Bill, which was passed by the Lok Sabha last week, was returned by the Rajya Sabha with a voice vote after a brief discussion and reply by the Finance Minister.
Speaking in the Upper House, Sitharaman said the proposed amendment to Section 10A of the Payment and Settlement Systems Act is only an enabling provision and does not introduce a Merchant Discount Rate (MDR) charge on consumers at this stage.
“The enabling provision we are bringing in does not impose any tax or transaction charge on UPI users,” Sitharaman said.
She added that after Parliament’s approval, the UPI and Services Steering Committee of the National Payments Corporation of India (NPCI) will consider whether an MDR charge should be introduced, stressing that no MDR framework has been finalised yet.
The clarification came amid speculation that users could be charged a transaction fee on UPI payments following the proposed amendments.
The Finance Ministry had earlier clarified that person-to-person UPI transactions will continue to remain free. It said that if MDR is introduced, it would apply only to a limited set of merchant transactions above a specified threshold and would be charged at a nominal rate, significantly lower than the MDR applicable to debit or credit card transactions.
“Most transactions will remain free of charge for merchants on UPI,” the ministry said.
Government officials said more than 90 per cent of transactions, including daily purchases of milk, vegetables and groceries, would not attract an MDR charge. The government also clarified that any MDR, if introduced, would be threshold-based and targeted at high-value transactions rather than being imposed across all UPI payments.
The government highlighted that UPI was introduced in 2016 and has remained free of charge for merchants and citizens since January 2020. It also noted India’s achievement in developing UPI into the world’s largest real-time interoperable payment system.