India is forming mobile-payment linkages with several countries, including Sri Lanka, UAE, and neighboring countries, according to a senior official at the Reserve Bank of India. The country also has arrangements with Bhutan and Nepal. The Reserve Bank of India is collaborating with other central banks in the ASEAN region to develop a cross-border payment platform for instant payments.
India is one of the few nations in the world to have introduced a central bank digital currency, although on an experimental basis. The RBI is investigating the security features of digital currencies and undertaking studies on their possible influence on bank deposits and even monetary policy transmission, according to previous officials, including Sankar.
The RBI considers CBDCs to be the future form of money and the most cost-effective alternative for cross-border payments, trade settlements, and remittances. RBI Governor Shaktikanta Das has proposed technological solutions to any government interested in developing common international standards for cross-border payments. Sankar hinted that the widespread adoption of digital currencies may take some time.
“We are in no hurry to roll it out immediately,” he said. “Once we have some visibility of what the outcome or impact will be, we’ll roll it out. We don’t keep a specific timeline for that.”
As part of this effort, RBI has joined Project Nexus, a multilateral initiative led by the Bank for International Settlements (BIS). The project aims to connect domestic fast payment systems (FPSs) across India, Malaysia, the Philippines, Singapore, and Thailand to enable instant cross-border retail payments. An agreement to this effect was signed by the central banks of the founding countries, including RBI, in Basel, Switzerland. Indonesia continues as a special observer in the project.
Nexus is designed to make retail cross-border payments faster, more efficient, and cost-effective. While India has been bilaterally linking its Unified Payments Interface (UPI) with other countries' FPSs for Person-to-Person (P2P) and Person-to-Merchant (P2M) payments, the multilateral approach under Nexus will further extend the global reach of India's payment systems.
