Banking Sector Reforms

UPI for NRIs: What it means for India and Indians abroad


From UPSC perspective, the following things are important :

Prelims level: Unified Payment Interface (UPI)

Mains level: Digital banking in India


The National Payments Corp. of India (NPCI) has allowed Indians abroad to use fast payments network UPI, if their domestic bank accounts are linked to their foreign mobile numbers.

What is UPI?

  • UPI is an instant real-time payment system developed by National Payments Corporation of India (NPCI) facilitating inter-bank transactions.
  • The interface is regulated by the Reserve Bank of India and works by instantly transferring funds between two bank accounts on a mobile platform.

What exactly has NPCI allowed on UPI?

  • NPCI issued a circular that paved the way for wider adoption of homegrown payments platform UPI.
  • So far, only Indian phone numbers were allowed on UPI, leaving out non-resident bank accounts linked to their phone numbers abroad.
  • In the first phase, phone numbers from 10 countries including Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the US, Saudi Arabia, United Arab Emirates, and the UK have been allowed to be used on UPI.
  • NPCI said it could extend this to other nations as well.

How will it benefit Indians abroad?

  • Once the systems are in place, non-resident Indians will be able to transact using UPI, irrespective of whether they are in India or abroad.
  • To use UPI, non-residents need to have either a non-resident external (NRE) account or a non-resident ordinary (NRO) account in India.
  • It would, of course, be more useful when account holders visit India, given the scale of UPI merchant infrastructure in India.
  • While abroad, they can use UPI to transfer funds to families in India and use it on e-commerce portals that allow such payments.

What are the prerequisites for this facility?

  • NPCI has asked banks to onboard only those accounts that meet the Foreign Exchange Management Act guidelines and instructions issued by the departments of the Reserve Bank of India (RBI).
  • Apart, the remitter, as well as beneficiary banks, will have to ensure they comply with anti-money laundering (AML) and combating of financial terrorism (CFT) checks.

Does it help the plan to take UPI global?

  • NPCI has been attempting to make UPI a global phenomenon and the idea to tap NRIs is a step towards that.
  • 10 countries are just to begin with and the list will expand in future.
  • NPCI has been trying to push homegrown payment systems in other countries through NPCI International Payments Ltd, a subsidiary it set up in 2020.
  • It has already tied up with payment system operators in Nepal, UAE, France, UK and others to allow UPI usage there.
  • There is also a plan to link UPI with Singapore’s Paynow.

How will it help the UPI ecosystem?

  • UPI is almost synonymous with digital payments in India, clocking over ₹12.8 trillion worth of transactions in December.
  • After a slow start in 2016, UPI payments have grown at a rapid pace. Given there are over 13.5 million NRIs, the availability of UPI is expected to raise transaction volumes.
  • Industry experts said that just like resident Indians do not have to pay for UPI, it will also be available to NRIs at no extra cost.
  • That said, it might be off to a slow start as the acceptance infrastructure abroad is still being developed.


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