INDIA ON TUESDAY kicked off its first cross-border real-time payments systems connectivity with Prime Minister Narendra Modi, who witnessed the launch event, stating that the linkage of Unified Payments Interface (UPI) and Singapore’s PayNow will benefit migrant workers, professionals, and students and their families in foreign remittances between the two countries.
Stating that the linkage is a “new era in cross-border fintech connectivity”, Modi said it will provide a low-cost, secure and real-time option for cross border remittances between India and Singapore.
Singapore Prime Minister Lee Hsien Loong said the idea of the linkage was first conceived in 2018 when PM Modi had visited Singapore. He said cross border remittances between India and Singapore amount to over $1 billion annually. Of the total inward remittances to India in 2020-21, the share of Singapore stood at 5.7 per cent, according to the Reserve Bank of India Remittance Survey, 2021.
RBI Governor Shaktikanta Das and the Monetary Authority of Singapore’s (MAS) Managing Director Ravi Menon launched the new linkage in the presence of Modi and Lee Hsien Loong. A live cross-border funds transfer between the two platforms was also carried out.
The UPI-PayNow linkage is a significant milestone in the development of infrastructure for cross-border payments between India and Singapore – which is among the major countries sending remittances to India – and closely aligns with the G20’s financial inclusion priorities of driving faster, cheaper, and more transparent cross-border payments.
“In today’s age, technology connects each other in more ways than one. Fintech is also a sector that connects people to each other. Under normal circumstances, the scope is limited to the boundaries of one country. The linkage is the beginning of a new era, a new chapter in cross border fintech connectivity,” Prime Minister Modi said.
To begin with, State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate both inward and outward remittances while Axis Bank and DBS India will facilitate inward remittances, according to a statement by the RBI.
Transfer across borders
THE NEW LINKAGE will enable users of each of the two fast payment systems – UPI in India and PayNow in Singapore – to make instant, low-cost fund transfers on a reciprocal basis without a need to get on board the other payment system.
For Singapore users, the service will be made available through DBS-Singapore and Liquid Group, which is a non-bank financial institution. The RBI said that more banks will be included in the linkage over time.
Currently, Indian users of the participating banks will be able to remit up to Rs 60,000 in a day using the mobile apps. “At the time of making the transaction, the system shall dynamically calculate and display the amount in both the currencies for convenience of the user,” the RBI said.
According to the RBI, ICICI Bank and Indian Overseas Bank users can send money to Singapore through their respective internet banking facilities. Indian Bank users can use the facility through its own mobile app called IndOASIS, and State Bank of India users can remit through the BHIM UPI Pay app. Currently, cross border transaction under the linkage is not possible on popular UPI platforms like PhonePe, Google Pay and Paytm.
The RBI also clarified that in the UPI-PayNow interlinkage transactions, only person-to-person (P2P) remittances towards the purpose of “Maintenance of Relatives Abroad” and “Gift” under the Liberalised Remittance Scheme (LRS) are allowed, and the prescribed LRS limits would be applicable. Funds held in bank accounts or e-wallets can be transferred to and from India using just the UPI-id, mobile number or Virtual Payment Address (VPA).
Speaking at the launch event, Modi also said that soon, mobile wallet transactions will overtake cash transactions in the country, thanks to UPI, which he called “the most preferred payment mechanism” in India, which both merchants and users have “voluntarily” adopted.
In 2022, there were over 74 billion transactions, amounting to Rs 126 trillion, which is equal to 2 trillion Singapore dollars, through UPI. This demonstrates that UPI is very easily, and in a very secure manner, able to manage the quantum of transactions.
Highlighting India’s digital infrastructure, the Prime Minister said that due to its strength, the government was able to “transfer money to people’s bank accounts directly in real time”.
“Participating financial institutions have committed to ensuring that the service is cost efficient and accessible, including to foreign workers and students residing in Singapore and India, enabling them to make and receive low-cost cross border remittances back to and from their home countries,” the Monetary Authority of Singapore said.
