UPI Funding Model, According to Governor Malhotra, Needs Long-Term Financial Support
RBI Governor Outlines Plans for Sustainable UPI Funding
In a significant development, Reserve Bank of India (RBI) Governor Sanjay Malhotra has announced that someone will eventually have to bear the costs involved in running Unified Payments Interface (UPI) transactions for the system to be financially sustainable in the long run.
Speaking at a Monetary Policy press conference, Malhotra clarified that while UPI is currently free for users, the operational costs are being subsidized mainly by the government, banks, and other stakeholders. However, he emphasized that these costs must be paid by someone—whether collectively (e.g., by the government) or individually (e.g., by users or merchants).
Malhotra's statements come as the government's policy has helped expand UPI usage, with daily transactions rising from 31 crore to 61 crore in the last two months. The RBI aims to simplify the process and make it more expeditious and hassle-free for survivors, nominees, or legal heirs to claim unattended bank deposits.
The RBI also plans to standardise the documentation required for banks to settle claims, which currently varies across banks. This move is intended to enhance customer service standards.
Malhotra also clarified that users will not necessarily have to pay for UPI transactions. However, he added that who pays is a matter of detail, but someone needs to bear the costs for the long-term viability of the UPI system.
Meanwhile, Navratna NALCO's net profit surged 77 per cent to Rs 1,064 Cr in Q1 FY26, marking a significant growth for the company.
[1] Malhotra stated that UPI is not free as the government subsidizes it. [2] The RBI aims to simplify the process and make it more expeditious and hassle-free for survivors, nominees, or legal heirs to claim unattended bank deposits. [3] Malhotra did not claim that UPI would always be free. [4] The RBI governor Sanjay Malhotra clarified that someone will have to pay for a sustainable funding model for the NPCI-led instant real-time payment system, Unified Payments Interface (UPI). [5] Malhotra added that who pays is a matter of detail, but someone needs to bear the costs for the long-term viability of the UPI system.
- The Reserve Bank of India (RBI) governor, Sanjay Malhotra, has highlighted the need for financial sustainability in the Unified Payments Interface (UPI) system, stating that the costs involved must be paid, eventually, collectively or individually, by someone.
- The RBI is also working on simplifying the process and making it more efficient for survivors, nominees, or legal heirs to claim unattended bank deposits, aiming to enhance customer service standards.
