RBI to reimburse MDR to banks on government payments

The Reserve Bank of India said the reimbursement will be applicable from 1 January, 2017


The RBI has asked banks to forward their claim for reimbursement of MDR along with statutory auditor’s certificate, as in the case of agency commission claims, to its Nagpur office on a quarterly basis. Photo: Aniruddha Chowdhury/Mint
The RBI has asked banks to forward their claim for reimbursement of MDR along with statutory auditor’s certificate, as in the case of agency commission claims, to its Nagpur office on a quarterly basis. Photo: Aniruddha Chowdhury/Mint

Mumbai: The Reserve Bank of India (RBI) on Thursday said it will reimburse banks the merchant discount rate (MDR) on debit cards used for payment of tax and non-tax dues to the government of India.

In a notification on its website, the central bank said the reimbursement will be applicable from 1 January, 2017.

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MDR is the commission paid by the merchant to the acquiring bank for every digital transaction allowed by the bank.

The banks are advised to forward their claim for reimbursement of MDR along with statutory auditor’s certificate to central bank office on quarterly basis, the regulator said in its notification.

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After demonetisation the government had asked banks to waive MDR or charges on debit card payments until 31 December to encourage more customers to use digital transactions. Since 2012, the RBI has capped the MDR for debit card transactions up to Rs2,000 at 0.75% and at 1% for all transactions above Rs2,000.

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