The reforms are aimed at updating outdated banking laws, strengthening India's rapidly expanding digital payment infrastructure, and ensuring the long-term sustainability of electronic payment systems.
Electronic Bank Records to Be Accepted as Court Evidence
The proposed Bankers' Books Evidence Bill, 2026 seeks to replace a law that has been in force for nearly 125 years.
Under the new legislation, electronic bank records will be recognized as valid evidence in courts, reducing the need for bank officials to repeatedly appear in legal proceedings to authenticate documents. The move is expected to simplify judicial processes, reduce administrative burdens on banks, and accelerate the handling of financial disputes.
The proposed law reflects the increasing digitisation of banking services, where the vast majority of financial records are now maintained electronically rather than in physical ledgers.
New UPI and RuPay Merchant Fee Framework
Alongside the banking evidence reform, the Taxation and Other Laws (Amendment) Bill, 2026 introduces a Merchant Discount Rate (MDR) on select digital transactions.
Under the proposal:
- Large merchants accepting UPI and RuPay debit card payments above ₹2,000 may be charged an MDR ranging from 0.4% to 0.5%.
- Small merchants and individual users will continue to enjoy zero charges for eligible UPI transactions.
- The measure is intended to help sustain the digital payments ecosystem while protecting small businesses and consumers.
The government has indicated that the revised MDR structure is designed to ensure payment service providers have adequate resources to continue investing in technology, security, and innovation.
Why the Changes Matter
India has become one of the world's leading digital payment markets, with UPI (Unified Payments Interface) processing billions of transactions every month. The rapid growth has transformed the way individuals and businesses conduct financial transactions.
However, maintaining payment infrastructure requires significant investment from banks, payment networks, and fintech companies. The proposed MDR for larger commercial transactions aims to create a more sustainable financial model without affecting everyday users or small enterprises.
Mixed Reactions
The proposed reforms have received a mixed response. Many banking and fintech experts have welcomed the modernization of evidence laws and the effort to create a sustainable framework for digital payments.
At the same time, some industry observers have expressed concerns that merchants facing higher transaction costs could eventually pass on a portion of these expenses to consumers through higher prices or service charges.
A Step Toward a Digital Banking Future
The introduction of the Bankers' Books Evidence Bill, 2026 and the Taxation and Other Laws (Amendment) Bill, 2026 underscores the government's commitment to modernising India's financial and legal systems. By recognising electronic banking records in courts and revising the fee structure for high-value digital transactions by large merchants, the proposed legislation seeks to balance innovation, efficiency, and the long-term sustainability of India's fast-growing digital economy.
