The UPI Fee Question Answered
Rumours of new UPI fees are common, but this month brings a specific change. Starting October 15, a Merchant Discount Rate (MDR) will apply to certain UPI transactions. However, this is not a fee for consumers. The charge is to be paid by merchants for person-to-merchant
payments exceeding ₹2,000. The standard rate will be 0.4%, capped at ₹300 for very large transactions. Importantly, person-to-person transfers and payments to small merchants remain free. Consumers will not be charged, and merchants are prohibited from passing this cost on to customers as a separate UPI fee. The government estimates that this change will not affect around 96% of all person-to-merchant transactions, as most fall under the ₹2,000 threshold.
EMI Outlook and Loan Rules
For those with floating-rate loans, all eyes are on the Reserve Bank of India's Monetary Policy Committee (MPC) meeting scheduled from October 5 to 7. The RBI has kept the repo rate—the rate at which it lends to banks—stable at 5.25% for its last four meetings. While some analysts expect the RBI to hold the rate steady again, others believe a small hike is possible due to rising inflation and global economic pressures. Any increase in the repo rate typically leads banks to raise interest rates on home, car, and personal loans linked to an external benchmark, which would result in higher EMIs. Borrowers should also be aware of proposed RBI rules, expected to be effective from April 2027, that aim to increase transparency around how loan tenures and EMIs are modified when benchmark rates change.
New Rules for Fixed Deposits
The Reserve Bank of India has introduced new rules for fixed deposits, effective October 1, aimed at increasing transparency. Banks are now required to offer uniform interest rates for similar deposits across all their branches on the same day. Additionally, for bulk deposits—now defined as ₹3 crore and above—banks must disclose the applicable interest rates on their websites daily by 10 a.m. These changes do not force banks to raise or lower FD rates but ensure customers get consistent and clear information. For savers, especially senior citizens, some small finance banks are offering rates as high as 8.50% on certain tenures this month, while rates from larger public sector banks like Bank of India are around 7.45% for specific periods. Post office time deposit rates are expected to remain steady, ranging from 6.90% to 7.50%.
Other Financial Updates to Note
Beyond the headline items, a few other financial adjustments took effect this October. For certain State Bank of India (SBI) salary account holders, the number of free transactions at other banks' ATMs has been reduced from ten to five per month. Charges under the National Pension System (NPS) have also been revised, with a new one-time onboarding fee of ₹200 for accounts opened through a Point of Presence (PoP). Finally, completing biometric Aadhaar authentication has become mandatory for those wishing to receive subsidies on LPG cylinders, although supply will continue at market rates for those who have not completed the process.
