# Sebi gets broker appeal against new UPI fee for market transfers

2026-09-16T21:31:45+00:00 | Business & Economy | Indian Opinion Desk

Corroboration: 3 independent outlets

Brokers have moved Sebi to protest the proposed 0.02% merchant discount rate on UPI transfers for capital market transactions, effective 15 October. The BSE Brokers' Forum told the regulator the fee could be many times the brokerage earned on each trade and would apply even when clients transfer their own money without executing a trade. Zerodha founder Nithin Kamath cited an example where 10,000 customers making 50 UPI transfers of Rs 2 lakh each without trading could cost a broker Rs 2 crore. Industry executives argue brokers are pass-through entities and should not be treated as merchants. A person familiar with the matter said the issue may fall outside Sebi's regulatory domain. The fee has also drawn criticism from mutual fund platforms. CapitalMind CEO Deepak Shenoy said a liquid fund charging 0.15% annually could pay 0.29% in annual UPI fees. The Securities and Exchange Board of India has not yet issued a response.

## Indian Opinion Analysis

All three outlets report broker opposition to the proposed UPI MDR, but they frame the core complaint differently. BusinessLine and Medianama lead with the cost burden on discount brokers and mutual funds, quoting specific loss scenarios, while Mint frames it as an industry appeal to Sebi, softening the criticism through an unnamed official who suggests the matter is outside Sebi's domain. None of the three outlets challenges the NPCI's proposed rate directly, they simply report the industry view. The practical consequence is the same: if the MDR sticks, discount brokers may have to raise charges or absorb losses, potentially slowing retail participation growth. The 15 October deadline for implementation is the key date to track.

## Coverage

- thehindubusinessline.com (neutral report) <https://www.thehindubusinessline.com/markets/upi-mdr-may-squeeze-low-cost-broking-as-fund-transfers-attract-charge/article71472948.ece>
  Leads with specific cost examples and quotes from brokers, no official counterpoint
- medianama.com (neutral report) <https://www.medianama.com/2026/09/223-investment-firms-mdr-on-upi/>
  Leads with industry criticism and detailed cost scenarios, frames as merchants speaking out
- livemint.com (neutral report) <https://www.livemint.com/market/brokers-forum-raises-concerns-on-mdr-with-sebi-11789568350506.html>
  Leads with broker appeal to Sebi, includes unnamed official saying issue not in Sebi's domain

Tags: CapitalMind, Nithin Kamath, NPCI, SEBI, UPI, Zerodha
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