In a push to promote digital transactions, the government on Thursday decided to refund banks the Merchant Discount Rate (MDR) of debit cards transactions effective from January 1, 2017. In order to implement this, the central bank said in a notification that it will reimburse banks the MDR on debit cards used for payment of tax and non-tax dues to the Government of India with effect from January 1, 2017. MDR is a fee charged to a merchant by a bank for providing debit and credit card services.
Banks have been asked to forward their claim for reimbursement of MDR along with statutory auditor's certificate, as in the case of agency commission claims, to RBI's Nagpur office on a quarterly basis. The first such claim may be made by April 30, 2017 for the quarter ending March 31, 2017.
Also, banks will have to certify that MDR charges for transaction amounts up to Rs 1 lakh have not been collected from the payer.
The government had earmarked Rs 200 crore for 2017-18 towards reimbursement of MDR charges on payments of government dues of up to Rs 1 lakh by debit cards, news agency Press Trust of India reported.
Post-demonetisation, the Finance Ministry had announced that MDR charges will be absorbed by the government for payments of tax, non-tax and other payments to the government by citizens using debit cards.
Finance Minister Arun Jaitley today said that the remonetisation situation with regard to replenishing the scrapped currency is "almost normal" now and the Reserve Bank is monitoring the supply on a daily basis.
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