ICICI Bank , one of India's leading private sector banks, is set to implement a new fee structure for payment aggregators processing UPI transactions. The change, scheduled to take effect from August 1, marks a significant shift in the UPI ecosystem.

Fee Structure Details

The new fee structure is as follows:

It's important to note that transactions settled directly into ICICI Bank merchant accounts will remain fee-free.

Industry Context

ICICI Bank is not the first to introduce such fees. Yes Bank and Axis Bank have been charging similar fees for the past 8-10 months. This move by ICICI Bank aligns with the growing trend in the banking sector to offset costs associated with UPI transactions.

Understanding the Charges

While UPI transactions continue to maintain zero Merchant Discount Rate (MDR) as mandated by the government, banks incur switch fees charged by the National Payments Corporation of India (NPCI). Some banks are now passing these costs onto payment aggregators.

Impact on Merchants

Payment aggregators typically transfer these costs to merchants through various means:

1. Platform fees
2. Reconciliation charges

This new fee structure may potentially impact the overall cost structure for merchants using payment aggregator services for UPI transactions.

The Broader UPI Ecosystem

This development highlights the evolving nature of the UPI ecosystem:

• Banks are seeking ways to recover costs associated with UPI infrastructure
• Payment aggregators play a crucial role in the transaction chain
• The zero MDR policy continues to shape the financial dynamics of UPI transactions

As the digital payments landscape in India continues to grow, such changes in fee structures may have significant implications for all stakeholders in the UPI ecosystem, from banks and payment aggregators to merchants and consumers.

ICICI Bank , one of India's leading private sector banks, has reported a robust financial performance for the first quarter, demonstrating resilience in a challenging economic environment.

Profit and Revenue Growth

The bank's profit after tax surged by 15.5% year-on-year to ₹12,768.00 crore, driven by strong core operating performance and improved asset quality. Net interest income, a key metric for banks, increased by 10.6% year-on-year to ₹21,635.00 crore.

Loan Portfolio and Deposit Growth

ICICI Bank's overall loan portfolio, including international branches, grew by 11.5% year-on-year to reach ₹13,63,945.00 crore. The domestic loan portfolio expanded by 12.0% year-on-year, with notable growth in various segments:

• Business banking portfolio: 29.7% year-on-year growth
• Retail loan portfolio: 6.9% year-on-year growth
• Domestic corporate portfolio: 7.5% year-on-year growth

Total deposits increased by 12.8% year-on-year to ₹16,08,517.00 crore.

Asset Quality

The bank maintained a strong asset quality position, with the net non-performing asset (NPA) ratio improving to 0.41%, compared to 0.43% a year ago. The provisioning coverage ratio on non-performing loans stood at a healthy 75.3%.

Net Interest Margin and Operating Expenses

ICICI Bank reported a net interest margin of 4.34%, compared to 4.36% in the same quarter last year. The bank's operating expenses increased by 8.2% year-on-year, reflecting investments in branch expansion and technology infrastructure.

Capital Adequacy

The bank's capital position remained robust, with a CET-1 ratio of 16.31% and a total capital adequacy ratio of 16.97%, including profits for the quarter.

Business Segment Performance

• Retail banking: Continued to be a key focus area, with the retail loan portfolio constituting 43.2% of the total portfolio, including non-fund based outstanding.
• Corporate banking: The bank maintained a cautious approach, with 73.2% of the corporate loan portfolio rated A- and above.
• Digital initiatives: ICICI Bank continued to enhance its digital capabilities to provide simplified solutions to customers.

Management Commentary

Sandeep Batra, Executive Director of ICICI Bank, commented on the results: "Our strategic focus continues to be on growing profit before tax excluding treasury through the 360-degree customer centric approach and by serving opportunities across ecosystems and micromarkets. We remain focused on maintaining a strong balance sheet, prudent provisioning, and healthy levels of capital while delivering sustainable and predictable returns to our shareholders."

Outlook

While the bank did not provide specific guidance on future performance, management expressed confidence in the bank's ability to capitalize on growth opportunities across key segments. The focus remains on risk-calibrated profitable growth and increasing market share in target areas.

ICICI Bank's quarterly results demonstrate its ability to navigate a challenging economic environment while maintaining strong financial metrics and focusing on sustainable growth strategies.

Key Financial Highlights:

The bank's performance sets a positive tone, with management focusing on leveraging its strong balance sheet and diverse business segments to drive growth in the coming quarters.