New Delhi, October 3 (Daily Kiran) : Neelkanth Mishra, Executive Director of the World Bank Group, addressed concerns about potential increases in Merchant Discount Rates (MDR) for Unified Payments Interface (UPI) transactions during the fifth Kautilya Economic Conclave in New Delhi. He emphasized that allowing MDR represents a regulatory right but noted that intense competition in the payment sector would likely prevent significant fee hikes.
Mishra explained that fears of widespread cost increases due to MDR could be exaggerated in a free and competitive market. He stated, “This is a free market. As long as there is no collusion among financial companies, banks, or payment aggregators to raise fees simultaneously, there are various ways to manage this.”
He expressed confidence that substantial fee increases are unlikely, citing examples of companies that successfully operated without charging MDR. Mishra also highlighted rising interest rates as the most significant risk facing global financial markets.
According to him, increases in risk-free interest rates could lead to declines in asset values, exposing vulnerabilities linked to heavily leveraged investments and loans secured by assets. He remarked, “If bond yields, which represent risk-free interest rates, rise, asset values will drop. This could render various types of leveraged investments unfeasible.”
Discussing the pressures on global markets due to high oil prices, rising bond yields, and geopolitical uncertainties, Mishra acknowledged the significant risks involved. However, he noted that India’s economic position is relatively stable compared to many heavily indebted economies.
Mishra concluded that stability in the situation would only come if bond yields decrease or if new economic risks prompt a reassessment of market evaluations. He cautioned, “We must remain vigilant against external shocks.”
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