Banking current affairs, 11 August 2026: Parliament clears the payments Bill — UPI stays free for consumers, MDR only for large merchants

The newspapers this morning lead with Monday’s Rajya Sabha session, and buried in the tax headline is the exam-relevant thread: a change to the law on digital payments. It is the cleanest kind of banking-awareness material — a dated fact wrapped around a framework (UPI, NPCI, MDR) a paper can test several ways. As always each item links to its source, and for each we set out the concept an examiner would build a question around.

The lead: Parliament clears the Taxation and Other Laws (Amendment) Bill, 2026

The Lok Sabha passed the Bill the previous week; on Monday, 10 August 2026 the Rajya Sabha returned it by a voice vote, completing its passage through Parliament. It now awaits Presidential assent to become law.

Parliament clears taxation bill; UPI to remain free — The Economic Times

What it does on payments is the part to learn:

• It amends Section 10A of the Payment and Settlement Systems (PSS) Act, 2007 — the provision that currently bars charging users for prescribed payment modes such as UPI and RuPay debit. Crucially it is an enabling provision: it lets the Central Government specify, by notification, which electronic payment modes stay protected from charges. It does not by itself impose any tax or transaction charge on UPI.
• Finance Minister Nirmala Sitharaman gave two assurances. First, consumers will pay no charge on UPI — as has been the case since it launched. Second, any future Merchant Discount Rate (MDR) would apply only to a limited category of merchant transactions above a prescribed high threshold; small merchants — kirana stores, street and vegetable vendors, auto drivers — would stay exempt. Whether any MDR is introduced, and its scope, is left to the UPI and Services Steering Committee headed by NPCI.
• The Bill is broader than payments: it also replaces the 5 June 2026 ordinance that gave an income-tax exemption to Foreign Portfolio Investors (FPIs) on interest and capital gains from Government Securities (G-Secs), and eases the conditions for fund managers relocating to India.

The concept being tested. The plumbing of India’s retail payments, a reliable area.

• UPI (Unified Payments Interface) is a real-time retail payment system built by NPCI and launched in 2016. It is interoperable and links bank accounts directly, so it is not a wallet — the money never leaves the banking system to sit in a stored-value balance.
• NPCI (National Payments Corporation of India) is the umbrella organisation for retail payments, set up in 2008 as a “not-for-profit” company (Section 8 of the Companies Act) promoted by the RBI and the Indian Banks’ Association (IBA) under the PSS Act, 2007. Besides UPI it runs RuPay, IMPS, FASTag, AePS, NACH and Bharat BillPay.
• MDR (Merchant Discount Rate) is the fee a merchant — never the consumer — pays for accepting a digital payment, usually a percentage of the transaction value, shared among the acquiring bank, the network and the card issuer. On UPI and RuPay debit it has been zero since 1 January 2020 (Section 10A of the PSS Act and Section 269SU of the Income-tax Act, both inserted by the Finance (No. 2) Act, 2019). Card MDR, by contrast, runs about 1.5–2% on credit cards and up to 0.9% on debit cards.
• The RBI regulates and supervises payment systems under the PSS Act, 2007. The distinction a question turns on: consumers do not pay MDR — it is a merchant-side cost.

Also on 10 August: the Bankers’ Books Evidence Bill

Alongside the tax Bill, the Rajya Sabha passed the Bankers’ Books Evidence (Amendment) Bill, which updates the Bankers’ Books Evidence Act, 1891 so that electronic and digital bank records are treated as admissible evidence in step with modern banking. The Bill was previewed in the 3 August digest.

The concept being tested. A perennial legal-awareness one-liner.

• Under the Bankers’ Books Evidence Act, a certified copy of an entry in a banker’s book is admissible in a court without producing the original ledger, sparing banks from sending records and officers to every case. The amendment makes clear that “bankers’ books” expressly includes data stored electronically, on servers or in the cloud — the point of the update.

What to write in your notebook

Three lines:

1. On 10 August 2026 Parliament cleared the Taxation and Other Laws (Amendment) Bill, 2026, amending Section 10A of the PSS Act, 2007 — an enabling provision. UPI stays free for consumers; any future MDR would apply only to large-merchant transactions above a high threshold, and the call rests with NPCI.
2. NPCI (set up 2008, a Section 8 not-for-profit promoted by RBI + IBA) runs UPI, RuPay, IMPS, FASTag, AePS, NACH and Bharat BillPay; MDR on UPI and RuPay debit has been zero since 1 January 2020.
3. The Rajya Sabha also passed the Bankers’ Books Evidence (Amendment) Bill (electronic records admissible); the same tax Bill restores income-tax relief for FPIs on G-Sec income, replacing the 5 June 2026 ordinance.