The Reserve Bank of India (RBI) has announced the launch of its cross-border payments with Singapore to strengthen their bilateral relations.
In a statement, India’s central bank noted that the move would involve the expansion of India’s Unified Payments Interface (UPI) in a historic integration with Singapore’s PayNow’s settlement system. RBI Governor Shaktikanta Das and Monetary Authority of Singapore (MAS) head Ravi Menon were present during the groundbreaking partnership.
The RBI said the expansion will improve the state of cross-border payments between both countries via mobile apps. Under the new regime, international transactions involving residents of both nations can be done through the use of phone numbers, a Virtual Payment Address (VPA), or only the UPI-id.
Users can remit up to $750 per day using the joint systems, and as an added measure of efficiency, “the system shall dynamically calculate and display the amount in both the currencies for the convenience of the user.”
The service will be available in India for users of the State Bank of India, Indian Bank, ICICI Bank, Axis Bank, and DBS India. On the other side, DBS Singapore and Liquid Group will provide cross-border services for Singaporeans.
“This is a great value addition for India’s payment rails given that close to 30% of the population in Singapore are expats, and they send money to India once a month or a quarter,” said Unocoin CEO Sathvik Vishwanath. “This integration eliminates friction reducing the processing time and costs.”
Payment options in both countries have ballooned since 2020, with both nations exploring the functionalities of central bank digital currencies (CBDC). There remains the possibility that Singapore and India might switch to CBDCs for cross-border settlements upon their respective launches.
Frowning at digital currencies
An underlying theme for both countries is the difference in stance on digital currencies, with India grabbing the bull by the horn to impose stern tax policies. Indian digital asset investors have been slammed with a 30% tax on gains and a 1% TDS on all transactions.
Conversely, Singapore is making giant strides toward transforming itself as a digital currency paradise through the passage of a progressive legal regime. Other perks to incentivize investors include offering residency permits for expatriates and a low tax burden.
Watch: India is building Web3 enabled payment rails
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