RBI and Nepal Rastra Bank Collaborate for UPI-NPI Linkage to Boost Cross-Border Digital Payments

RBI and Nepal Rastra Bank Sign Pact for UPI-NPI Linkage

The Reserve Bank of India (RBI) and the Nepal Rastra Bank (NRB) have signed terms of reference to integrate their fast payment systems, India’s Unified Payments Interface (UPI) and Nepal’s National Payments Interface (NPI). This collaboration aims to streamline cross-border remittances between the two countries, enabling users of both systems to conduct instant, cost-effective fund transfers.

After the signing of the terms of reference, the necessary systems will be implemented to interlink UPI and NPI. The formal launch of the UPI-NPI linkage will take place at a later date, as announced by the RBI. This integration between the RBI and NRB will deepen financial connectivity and reinforce the historical, cultural, and economic ties between India and Nepal.

The collaboration between the central banks will facilitate cross-border remittances, allowing users to make instant and low-cost fund transfers. It will eliminate the need for traditional banking channels and intermediaries, making transactions more convenient and efficient. The integration will also contribute to financial inclusion, empowering individuals and businesses, particularly in remote areas, by providing access to a wider range of financial services.

The RBI and NRB are committed to implementing the integration and ensuring the security and integrity of cross-border digital transactions. This collaboration sets a positive precedent for other countries to explore similar partnerships, promoting regional integration and digital connectivity.

1. Convenience and Speed: With the UPI-NPI linkage, users can make instant payments directly from their UPI or NPI-enabled accounts, eliminating the need for traditional banking channels and intermediaries. This reduces transaction time and enhances convenience.
2. Cost Efficiency: The collaboration between RBI and NRB through the UPI-NPI linkage eliminates costly charges associated with traditional remittance methods. Individuals and businesses involved in cross-border trade and remittances can benefit from significant cost savings.
3. Financial Inclusion: The UPI-NPI linkage contributes to advancing financial inclusion in both countries. It provides individuals and businesses, especially those in remote areas, with access to a broader range of financial services, fostering economic growth and development.
4. Strengthened Bilateral Relations: The UPI-NPI linkage is expected to strengthen bilateral relations between India and Nepal. The increased ease of conducting cross-border transactions promotes trade, tourism, and investment, fostering economic cooperation and shared prosperity.
5. Enhanced Security: Both the UPI and NPI systems prioritize robust security frameworks. The collaboration between RBI and NRB emphasizes security measures to protect users’ financial information and prevent fraudulent activities.

Future Implications:
The UPI-NPI linkage agreement sets a precedent for other countries to explore similar collaborations, fostering regional integration and digital connectivity. It paves the way for increased cross-border interoperability in the payment systems domain, enabling seamless transactions between neighboring countries.

Please note that the formal launch date of the UPI-NPI linkage is yet to be announced.

Also Read: Fintech