India and Singapore linked their systems to enable real-time money transfers between the two nations, as countries in the region seek to bring down barriers to the quick movement of funds.
Prime Minister Narendra Modi and his Singapore counterpart Lee Hsien Loong virtually attended the launch of cross-border connectivity between the Unified Payments Interface (UPI) of India and PayNow of Singapore on Tuesday.
A new milestone in India-Singapore relations: PM Modi on linking UPI and PayNow
“After today, people in Singapore and India will be able to transfer money to each other through their phones just like they do within their own countries…. Today’s launch has opened a new chapter in cross-border FinTech connectivity,” Modi tweeted after the launch.
Reserve Bank of India’s Governor Shaktikanta Das initiated the first transaction with his counterpart Managing Director Ravi Menon, according to a statement Tuesday by the Monetary Authority of Singapore (MAS).
“The UPI-PayNow linkage will enable users of the two fast payment systems in either country to make convenient, safe, instant, and cost-effective cross-border funds transfers using their respective mobile apps. Funds held in bank accounts or e-wallets can be transferred to/from India using just the UPI-id, mobile number, or Virtual Payment Address (VPA),” according to a statement issued by RBI.
The India-Singapore payment connection is part of the trend in Asia where instantaneous, cross-border fund transfers via mobile phones are happening, bypassing bank branches and doing away with high transfer fees. Singapore rolled out a similar connection with Thailand in 2021, and said it is working with Malaysia for such a project.
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Singapore is among the top countries sending remittances to India, after the US, United Arab Emirates, and the UK, according to RBI. The Southeast Asian city-state accounted for almost 6 per cent of India’s total inward flows of $89 billion from individuals in the fiscal year ended March 2022.
Fund transfer
In India, State Bank of India, Indian Overseas Bank, Indian Bank, and ICICI Bank will facilitate both inward and outward remittances while Axis Bank and DBS India will facilitate inward remittances.
For Singapore users, the service will be made available through DBS-Singapore and Liquid Group (a non-bank financial institution). More number of banks will be included in the linkage over time, the MAS release said.
“Customers of the participating banks can undertake cross-border remittances to Singapore using the bank’s mobile banking app/internet banking. To begin with, an Indian user can remit up to ₹60,000 in a day (equivalent to around SGD 1,000),” the release said.
At the time of making the transaction, the system will calculate and display the amount in both the currencies for convenience of the user.
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The interlinkage between UPI and PayNow aligns with the G20’s financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments and will be a significant milestone in the development of infrastructure for cross-border payments between India and Singapore, the release added.