RBI and NRB discuss India-Nepal remittances

To progress with this initiative, the two central banks signed and exchanged Terms of Reference on Thursday. India's fast payment system is known as the Unified Payments Interface (UPI), while Nepal's counterpart is called the National Payments Interface (NPI).

The RBI stated that integrating UPI and NPI aims to simplify cross-border remittances between India and Nepal, allowing users of both payment systems to conduct instant, cost-effective fund transfers.

After exchanging Terms of Reference between RBI and NRB, the required infrastructure will be set up to connect UPI and NPI. The formal introduction of this connection, indicating the commencement of operations, will take place at a later time.

The RBI expressed that the collaboration between India and Nepal in connecting their fast payment systems through the UPI-NPI linkage will deepen financial connectivity and strengthen the longstanding historical, cultural, and economic bonds between the two nations.

Representatives of RBI highlighted the potential of UPI to become an international standard for cross-border payments during his keynote address at the 59th SEACEN Governors’ Conference in Mumbai. They noted that UPI is already connected with PayNow in Singapore, and RBI has previously signed a Memorandum of Understanding (MOU) with the Central Bank of the UAE to link their respective Fast Payment Systems (FPSs).

In November 2023, they mentioned the possibility of exploring a connection between India's fast payment system and Japan's to enhance the efficiency and reduce the cost of cross-border payments, leveraging the capabilities of financial technology (fintech).

Exploring CBDC possibilities

Recently, The Reserve Bank of India has announced its intention to explore offline alternatives to enhance the adoption of its central bank digital currency (CBDC), the digital rupee, in remote areas of India.

Primarily, the RBI aims to find offline solutions to facilitate the use of the digital rupee in regions with limited internet connectivity across the country. Various offline methods, both proximity and non-proximity-based, will undergo assessment to determine their viability in diverse environments such as hilly, rural, and urban areas. These initiatives are aimed at overcoming challenges associated with internet accessibility.