The Reserve Bank of India (RBI) and Nepal Rastra Bank (NRB) are planning to integrate their respective fast payment systems for facilitating cross-border remittances between India and Nepal.
Towards this end, the two central banks on Thursday signed and exchanged Terms of Reference. The fast payment systems (FPSs) of India and Nepal are called the Unified Payments Interface (UPI) of India and the National Payments Interface (NPI).
RBI, in a statement, said the integration of UPI and NPI is aimed at facilitating cross-border remittances between India and Nepal by enabling users of the two payment systems to make instant, low-cost fund transfers.
“Based on the Terms of Reference exchanged between RBI and NRB, the necessary systems will be put in place for the interlinking of UPI and NPI. The formal launch of the linkage, i.e., commencement of operations, will be done at a later date.
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“The collaboration between India and Nepal in linking their fast payment systems through the UPI-NPI linkage will further deepen financial connectivity and reinforce the enduring historical, cultural, and economic ties between the two countries,” the RBI said.
“Our sustained engagement in the India Stack and the Unified Payments Interface (UPI), especially during the pandemic and thereafter, has given us the confidence that digital public infrastructure can become a critical part of global public good when scaled up beyond national boundaries.
“The linkage of Indian UPI and the fast payment systems of a few other countries drives home the potential of the UPI to become an international model for cross-border payments,” Shaktikanta Das, Governor, RBI, said in his keynote address at the 59th SEACEN (South East Asian Central Banks) Governors’ Conference in Mumbai on Thursday.
UPI already has linkage with “PayNow” (the FPS of Singapore). RBI had signed a MOU with the Central Bank of the UAE in July 2023 for linking their Fast Payment Systems (FPSs) — UPI of India — with the Instant Payment Platform (IPP) of the UAE.
In a speech in November 2023, Das said the linkage between the fast payment systems of India and Japan may also be explored to leverage the power of fintech and make cross-border payments more efficient and less costly.