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Banks holding on to subsidy share
June 21, 2022
Payments companies and banks are at loggerheads over the sharing of government-granted subsidies for building payment infrastructure, said three people with knowledge of the matter.
The companies have written to the National Payments Corp. of India (NPCI), complaining that ₹700 crore of the ₹1,500 crore granted in the budget is being retained by banks, they said. This has deprived companies connecting up the last mile of state-promised revenues, according to them. The government granted the subsidies in exchange for waiving Merchant Discount Rate (MDR) charges.
“The government has released ₹700 crore worth of subsidies to banks but they are not sharing it with any payment aggregators,” said the CEO of a payments company on condition of anonymity.
“We have taken up the matter with NPCI, which is the nodal agency but the feedback that we got is that we should take the matter up with respective banks, but they are not responding.”
Last year, finance minister Nirmala Sitharaman had announced a ₹1,500 crore fund to hasten the expansion of India’s digital payments industry, a move that was seen as compensating for the waiver of MDR on the use of the Unified Payments Interface (UPI) and RuPay cards in her previous budget.
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