Mumbai: In a bid to boost transactions using debit cards, and digitisation on the whole, the Reserve Bank of India (RBI) on Wednesday has capped merchant discount rate (MDR) and will create a framework for asset-light acceptance infrastructure.
The decision was announced by the central bank’s six-member Monetary Policy Committee (MPC) while discussing the bi-monthly monetary policy here.
The MPC stated that a differentiated MDR for asset-light acceptance infrastructure and a cap on the amount of MDR per transaction will soon be prescribed. This, the RBI believes, will help facilitate increased usage of debit cards along with sustainability of the business for the entities involved.
The decision comes after the MPC noted a significant increase in the use of POS (point of sale). To this regard, the RBI revealed that it was “about time” that a further push was given, and hence proposed imposing a limit of the MDR.
According to the RBI, the proposed scheme will help widen the network of establishments that will enable use of debit cards. Further, it noted that marginalising MDR would increase debit card usage among small merchants.
Meanwhile, the MPC in a 5: 1 majority decided to keep the key policy repo rate unchanged at 6 percent, and reverse repo rate at 5.75 percent. The cash reserve ratio too has been left unchanged at 4 percent.
The projection of real GVA (gross value added) growth for 2017-18 of the October resolution at 6.7 percent has been retained.
“On the whole, inflation is estimated in the range 4.3-4.7 per cent in Q3 and Q4 of this year, including the HRA effect of up to 35 basis points, with risks evenly balanced,” the apex bank said in its policy statement.
The MPC estimates growth in the third and fourth quarter of this fiscal year to be 7 and 7.8 percent respectively. (ANI)