2 weeks Ago By Simone Lobo
Explainer Briefly Slides The National Payments Corporation of India (NPCI) will now allow Non-Resident Indians (NRIs) to make transactions on the UPI ecosystem, reported the Economic Times. NRIs can now link their international mobile numbers to their Non-Resident External/Non-Resident Ordinary (NRE/NRO) bank accounts. The NPCI approved this provision in 2023, asking banks to make the necessary changes.
Customers with numbers from 12 countries: Australia, Canada, France, Hong Kong, Malaysia, Oman, Qatar, Saudi Arabia, Singapore, United Arab Emirates, United Kingdom and United States of America, can make transactions after downloading select UPI Apps on their phone. Approved Banks The NPCI has given 14 banks approval to support linkages with international mobile numbers. They are: Approved UPI Apps Transactions can be made through 7 apps : Requirements for banks According to the 2023 circular, member banks will have to ensure that accounts are compliant with extant Foreign Exchange Management Act (FEMA) and Reserve Bank of India (RBI) regulations before they are allowed to use this facility.
Beneficiary banks will also be responsible for ensuring that user accounts adhere to Anti-Money Laundering (AML)/ Combating of Financing of Terrorism (CFT) checks. The accounts are also subject to all extant UPI guidelines during the onboarding checking process. Why is the NPCI pushing UPI internationally? The NPCI revealed in its circular that it “had been receiving requirements from the eco-system” to allow non-resident accounts with international numbers to use UPI.
It also noted that there had been “customer demand” in the ecosystem to enable UPI for NR accounts. Additionally, in its Report on Currency and Finance 2023-24 the RBI shared that remittances to India are estimated to increase to around US$ 160 billion in 2029 from US$ 115 billion in 2023 due to India’s growing emigrating population. In order to cater to this growing population, it proposed a cross-border payment system that could improve the speed and transparency of transactions, reduce liquidity costs and fees and benefit India’s economy.
The RBI also said that the increase in remittances could be an opportunity for Fintechs to provide cheaper solutions in cross-border payments. While, the report pitched interoperable FPSs as a solution to this demand, allowing NRIs to use UPI could easily address this demand for an accessible remittance process. Upcoming challenges While Indians across the world might have the provision to use UPI, they could run into a few roadblocks.
Users who change their sim/mobile number have to re-register on their UPI app and lose access to their old account. Further, customers also generally need to share their updated number with their bank through a form or letter. This process is likely to be even more cumbersome for customers located abroad who will have to coordinate with their banks based in India and will have to re-register to create UPI IDs.
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