At Mumbai's Bengal Chamber of Commerce & Industry Financial Market Conclave, RBI Deputy Governor SC Murmu tackled core issues surrounding Merchant Discount Rate costs, digital payment security, rising cash circulation, and the responsibility of corporate boards for AI oversight.
- MDR cost concerns unlikely to reverse digital payment momentum
- Cash circulation growth explained by its store-of-value function
- Corporate boards accountable for AI system governance
What happened
During the Financial Market Conclave held by the Bengal Chamber of Commerce & Industry in Mumbai, RBI Deputy Governor SC Murmu directly addressed industry concerns about digital payment charges and regulatory pace. He reassured stakeholders that worries about rising Merchant Discount Rate (MDR) affecting user adoption of digital payments were unfounded. Murmu highlighted the RBI's ongoing regulatory efforts to categorize financial entities and clarify applicable guidelines, facilitating compliance amid rapid technological developments.
Murmu also spoke about the persistent increase in cash circulation despite widespread adoption of the Unified Payments Interface (UPI). He explained that this phenomenon is due to cash's dual role — it is increasingly replaced by digital tools for transactions but remains important as a store of value. Furthermore, the Deputy Governor underlined the need for collective responsibility in addressing network-wide financial fraud and announced RBI plans for a centralized Digital Payments Intelligence Platform.
Why it matters
The reassurances provided by RBI's Murmu help alleviate fintech and merchant fears that fee adjustments linked to MDR will deter consumers, which is crucial for sustaining India's rapid digital payment adoption. This clarity supports market confidence, ensuring the momentum toward digital financial inclusion continues. Recognizing cash's store-of-value role also offers a more nuanced understanding of payment behaviors and economic needs in India’s growing population.
On the governance front, Murmu’s emphasis on holding corporate boards accountable for AI use reinforces the importance of oversight as automation and machine learning increase within financial services. Clear regulations and collaborative fraud mitigation highlight the RBI’s commitment to maintaining a safe and resilient digital ecosystem, critical for trust and systemic stability.
What to watch next
Market participants should monitor how MDR-related policy updates impact transaction costs and merchant acceptance over the coming months. RBI’s move toward structured regulatory categories for banks and fintechs promises clearer enforcement but will require businesses to adapt swiftly. The rollout of the Digital Payments Intelligence Platform will also be key to strengthening ecosystem security and fraud detection capabilities.
Corporate governance around AI systems is another area to watch closely. Boards will need to develop expertise to meet RBI’s expectations for accountability in AI deployment. This shift could spur greater investments in risk management frameworks, compliance upgrades, and stakeholder education within firms operating in India’s fast-evolving digital finance environment.