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Informist, Thursday, Oct. 17, 2024

 

By Krity Ambey

 

NEW DELHI – India is looking to set up a multilateral initiative to link its unified payment interface with the instant payments systems of Gulf nations, two government officials said. The regional fast payments network with members of the Gulf Cooperation Council, also called GCC, will follow the template of Project Nexus implemented by the Bank for International Settlements.

 

Project Nexus aims to standardise how fast payments systems of different countries can be linked together. According to Switzerland-based Bank for International Settlements, the fourth phase of the Project Nexus will see the Reserve Bank of India joining the central banks of Malaysia, the Philippines, Singapore, and Thailand as well as local operators of fast payments systems.

 

Under the proposed regional network, India's UPI and instant payments systems of each of the GCC countries--the United Arab Emirates' Aani, Qatar's Fawran, Bahrain's Fawri+, Saudi Arabia's Sarie, and Kuwait's WAMD--would be interoperable with one another. Commerce and Industry Minister Piyush Goyal had discussed the idea with UAE officials at the 12th meeting of the India-UAE High Level Joint Task Force on Investments on Oct. 7 in Mumbai, one of the officials said.  

 

There are two options on the table to implement a regional instant payments network with the Gulf, the official said. The GCC could either join the Bank for International Settlements' Project Nexus, or India and the Gulf nations could collaborate and follow the blueprint of the project to develop a network, the official said. "The Reserve Bank of India Innovation Hub can spearhead the exercise, but the idea is in very initial stages right now."

 

"In the next phase of Nexus, the BISIH (Bank for International Settlements Innovation Hub) Singapore Centre will support a coalition of countries who are interested to implement Nexus in the real world and use it to connect their domestic IPS (instant payment system)," the Bank for International Settlements had said in July in its latest report on Project Nexus. "Each IPS would need to invest time and resources to be able to connect to and communicate with Nexus, but this would be a one-time effort rather than being repeated every time it connects to a new country."

 

The idea for a multilateral instant payments system had originated in 2022 when BIS Innovation Hub built a working prototype network that connected three test payment systems--the eurozone's TARGET Instant Payment Settlement, Malaysia's Real-time Retail Payments Platform, and Singapore's Fast and Secure Transfers.

 

An interoperable instant payment system eases overseas remittances as well as merchant payments. India has so far bilaterally integrated UPI with the fast payment systems of France, Sri Lanka, Oman, Bhutan, and Mauritius. In Southeast Asia, the Indian interface is already linked with the payment systems of Malaysia, Thailand, the Philippines, Vietnam, Singapore, Cambodia, South Korea, Japan, Taiwan, and Hong Kong. The Reserve Bank of India is in talks with central banks of several other countries to link the instant payments systems.

 

The international arm of the National Payments Corp of India, which operates UPI, has also been collaborating with central banks of developing nations to help them set up a fast payment system. Recently, NPCI International Payments Ltd signed an agreement with the Bank of Namibia and the Central Reserve Bank of Peru to help develop instant payment systems similar to India's.  End

 

Edited by Akul Nishant Akhoury

 

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