SBI is seeing traction in UPI payments through YONO Pay, but its share remains far behind the market leaders, Setty said.
His comments came amid a growing debate over introducing charges on UPI merchant payments and whether banks can quantify the rising costs of supporting the country’s digital payments infrastructure.
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“On the cost side, we cannot quantify specifically because most of the infrastructure is also a shared infrastructure. You can’t assign that this is a cost which is happening on the UPI,” Setty said.
The government is considering legal changes to enable charges on UPI merchant payments, particularly transactions above Rs 2,000.
On the potential impact on SBI, Setty said, “We have to see the fine print and whether the government exercises the enablers that are there.”SBI processed 631.6 crore UPI transactions in June 2026, according to NPCI data, but only 2.3 crore were carried out through its own apps.
Banks and fintech companies have argued that UPI may be free for consumers but involves significant costs related to technology infrastructure, cybersecurity, network operations and customer communication.
Pine Labs CEO Amrish Rau told The Times of India that Parliament has moved to amend the Payment and Settlement Systems Act to enable some form of merchant discount rate (MDR) while keeping consumer payments free.
UPI processes nearly 23 billion transactions a month, while costs related to IT, innovation and cybersecurity have risen almost 300% over the past 12-24 months, Rau said.
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“Based on current discussions, we expect UPI MDR to be in the range of 0.05-0.07%, and RuPay debit card MDR at around 0.15-0.2%, applicable only to large merchants,” Mehul Mistry, senior vice president at Zeta, told TOI.
SBI Q1 profit rises 14%
Setty’s comments came as SBI reported a 13.73% year-on-year rise in consolidated net profit to Rs 24,113 crore for the June quarter.
Standalone net profit rose 10.23% to Rs 21,121.22 crore, while core net interest income increased nearly 15% to Rs 46,992 crore. Gross advances grew 18.63%, though domestic net interest margin narrowed to 3%.
Setty said SBI expects to maintain its domestic NIM at around 3% in FY27 and raised its credit growth guidance to 14-15%, from 13-15% earlier.
Deposit growth stood at 9.73%, with Setty saying 10-11% growth would be sufficient to fund advances. SBI’s credit-deposit ratio is currently 74%, which he said could rise to around 80%.