SEBI To Review Brokers’ Concerns Over New UPI Charges
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SEBI will examine brokers’ concerns over the proposed 0.02% UPI charge on capital-market transactions, as discount brokers warn that repeated fund transfers could significantly increase their operating costs.
The Securities and Exchange Board of India (SEBI) will examine concerns raised by discount brokers over the proposed merchant discount rate (MDR) on large UPI transactions in the capital markets. SEBI chairman Tuhin Kanta Pandey said the regulator would look into the issues and explore ways to address them.
Under the new framework, UPI transactions involving capital-market activities, such as payments to stockbrokers, mutual funds, investment advisers and dealers will attract an MDR of 0.02%. The charge will be capped at ₹300 per transaction and will come into effect from 15 October.
Discount Brokers Concerned About Rising Costs
Discount brokers have raised concerns that the new charge could significantly increase their expenses. The issue is particularly relevant because customers can transfer money into their brokerage accounts without necessarily executing a trade.
Nithin Kamath said brokers cannot compel customers to trade after they transfer funds. As a result, brokers could incur UPI charges without generating any corresponding trading revenue.
The impact could become more pronounced because of SEBI's periodic settlement rules. Brokers are required to return unused client funds at regular intervals, after which customers often transfer the money back into their brokerage accounts.
A significant share of these transfers is made through UPI. Brokers therefore fear they could repeatedly bear the transaction costs without receiving additional revenue.
Brokers Seek Changes To The Framework
New-age brokers are also preparing to approach SEBI over the proposed MDR structure. Industry sources said brokers could seek a lower transaction cap and changes to the threshold at which the charge applies.
The discussions come as the new UPI pricing framework is scheduled to take effect from 15 October. SEBI's review could determine whether adjustments are made to address the specific cost concerns raised by the broking industry.
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Vishwa has spent 10+ years across fintech and FMCG doing what most people miss, connecting the dots, catching trends before they trend, and finding the angle nobody else thought to ask about.
At Kotak Neo, she drives content strategy for neoshorts, Kotak News Desk, and Investing Guide, turning market noise into something worth reading.
When she's not decoding markets, she trades charts for canvases, chasing art, painting, and architecture across cities she's yet to explore.
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