MUMBAI: Reserve Bank Governor Sanjay Malhotra, who had earlier stated that UPI cannot remain free forever and that someone else is now paying for it, on Wednesday said the digital payment app will remain a zero-cost platform to encourage its wider adoption.
“Currently, we have no proposal to impose any charges on UPI transactions,” Governor Malhotra said during the customary post-policy presser in response to a question from the press.
Addressing concerns about possible charges on digital payments, he clarified that “UPI will continue to remain free for users under present policy.”
This comes against the government massively slashing the subsidy allocation in the budget by a whopping 78 per cent to a low of Rs 437 crore in FY26, down from Rs 2,000 crore in FY25 and Rs 3,631 crore in FY24.
Malhotra's statement reinforces the government and the central bank’s stance of keeping the most popular digital payment tool a zero-cost platform to encourage wider adoption of digital payments across the country.
The statement comes at a time when UPI transactions continue to scale record highs, cementing the country’s position as the world’s largest real-time payments market. It also comes amid renewed speculation about the sustainability of UPI’s zero-cost model.
He previously had noted that “there are costs (associated with UPI transactions), and they need to be paid for by someone,” and acknowledged that UPI may not stay free forever. However, today he emphasised that no changes are being introduced now.
Across the ecosystem, UPI has long been a largely free platform, with the government and RBI aiming to promote digital payments. The Payment and Settlement Systems Act and related guidelines currently prohibit charging fees from users or merchants for UPI transactions.
Earlier this year, the finance ministry had also clarified in the Parliament that there was no plan to impose transaction charges on UPI, responding to public concern after earlier comments.
These concerns came out after the government had drastically slashed the subsidy it had been allocating to UPI in the current budget. This subsidy helps cover the operational costs of UPI services, which are far greater than the subsidy amount, as UPI is designed to be a cost-free service for users.
In the FY25 budget, the government had made a Rs 2,000 crore total outlay for the subsidy but had released only a third of that to banks and other stakeholders. But it has again reduced the subsidy outlay for FY26 by 78 per cent to a low of Rs 437 crore. In FY24, the subsidy was Rs 3,631 crore. This has raised concerns among industry experts about whether the allocated amount will be sufficient. This massive reduction in subsidies is seen as a potential indicator that banks may start charging fees on UPI transactions to offset their operational costs.