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Canara Bank Eyes ‘Multi-Bagger’ Opportunity in UPI, Estimates ’450 Crore from MDR
- •Canara Bank CEO Brajesh Kumar Singh estimates the bank could earn ’450 crore from MDR on UPI transactions, recovering roughly half of its ’900 crore payment-related costs.
- •The bank, with its Ai1 app and 11 crore customers, aims to leverage its role as an issuer, acquiring bank, and PSP in the growing digital payments ecosystem.
- •While 96% of UPI transactions are below ’2,000, limiting immediate MDR revenue, the bank anticipates increased earnings as transaction volumes expand.
- •Canara Bank believes greater monetization of UPI will encourage banks to innovate and invest in new payment products and services.
- •The bank expects limited impact from the Maharashtra farm loan waiver due to its restricted exposure to drought-prone areas, with no immediate NPA classification for deferred loans.
Key Questions Answered
Canara Bank MD and CEO Brajesh Kumar Singh estimated that the bank could earn roughly ₹450 crore from the proposed Merchant Discount Rate (MDR) framework on UPI transactions, helping recover about half of the bank's annual payment-related costs.
Around 96% of UPI transactions are below ₹2,000, which limits the immediate revenue opportunity from MDR. Additionally, certain categories have a fixed charge of ₹5, and the collected MDR is distributed among ecosystem participants like acquiring and issuing banks.
Canara Bank has limited exposure to drought-prone areas in Maharashtra, so it does not expect significant asset quality pressure or immediate impacts on its profit and loss account from the farm loan waiver issue. Loan repayments in distressed districts can be deferred without immediate NPA classification.
