With Unified Payments Interface (UPI) making its maiden debut in cross-border person-to-person payment facility, Prime Minister Narendra Modi said on Tuesday that India’s digital transactions will soon overtake cash transactions.
The Reserve Bank of India (RBI) Governor Shaktikanta Das and Monetary Authority of Singapore (MAS) Managing Director Ravi Menon launched a real-time link to facilitate easier cross-border money transfers between the two countries.
Initially, selected customers can use India’s UPI and Singapore’s PayNow app to transfer funds of up to (Singapore dollar) SGD 200 per transaction, which is capped at SGD 500 per day. By March 31, the service will be extended to all customers who can transfer funds of up to SGD 1,000 a day.
In the India-Singapore link, 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, RBI said.
For Singapore users, the service will be made available through DBS-Singapore and Liquid Group – a non-bank financial institution. More banks will be included in the linkage over time.
In FY22, there have been more than 74 billion transactions amounting to Rs 126 trillion, Modi said. In January, UPI recorded 8 billion transactions totalling Rs 13 trillion, as per information on the National Payments Corporation of India (NPCI), which runs UPI.
“This facility will provide low-cost and real-time options for cross-border remittances for our countries. The people who will specifically benefit from this are migrant workers, professionals, students and their families,” Modi said.
The cross-border payments and remittances between Singapore and India amount to $1 billion annually by 100,000 Indians residing in Singapore, Lee Hsien Loong, Prime Minister of Singapore said while speaking at the event. In 2018, the two countries worked initiated cross-border card and QR code payments.
“It is the world’s first linkage to include cloud-based infrastructure and non-bank financial institutions. As we add more use cases the linkage will grow in utility,” Loong said.
Recently, the RBI allowed all inbound travellers to use UPI payments for their merchant payments in the country. This facility is initially extended to travellers from G20 countries arriving at select international airports.
Remittances to India by non-resident Indians rose 12% on year to about $100 billion in 2022, underscoring the surge in demand for Indian professionals globally after the pandemic. Pertinently, despite the spike in digital transactions, cash in circulation in the economy continues to rise.
The notes in circulation (NIC) in the Indian economy rose 8% as of December 2 from a year before to Rs 31.93 trillion. Between March 2016 (the note ban exercise was undertaken in November 2016) and March 2022, the notes in circulation rose from Rs 16.42 trillion to Rs 31.06 trillion. This means it grew from the pre-demonetisation level of 10.7% of GDP in FY16 to 13.1% in FY22.