RBI sets sights on UPI expansion, payment linkages

The newly appointed governor of the Reserve Bank of India (RBI), Sanjay Malhotra, announced that the central bank will expand the reach of United Payments Interface (UPI) bilaterally by linking UPI with fast payment systems of other countries and facilitating efficient cross-border payments.

Simultaneously, the RBI will explore linking payment systems other than UPI to improve cross-border payment effectiveness and foster innovation in payment systems through “soft-touch regulations” within established boundaries. 

“While in domestic payments, the success of UPI has propelled India to a leadership position with a share of 48.5 per cent in global real-time payments by volume, we will endeavour to make cross-border payments more efficient,” Malhotra said at the inauguration of Digital Payments Awareness Week 2025.

“This assumes priority as India is the largest receiver of personal remittances globally. As per a World Bank report, it has been estimated that in 2024, India received remittances totalling approximately $130 billion. We need to address the challenges of high cost, slow speed, and insufficient access and transparency in cross border payments,” Malhotra highlighted.

The central bank will continue its engagement in a multilateral project called Project Nexus, to enable instant cross-border retail payments, Malhotra informed. Nexus, conceptualized by the Innovation Hub of the Bank for International Settlements (BIS), aims to connect the fast payment systems of four Southeast Asian countries—Malaysia, Philippines, Singapore, and Thailand—and India, who would be the founding members and first mover countries of this platform.

“Apart from the RBI, the government and other important stakeholders such as the banks and payment system operators have also taken a number of initiatives to encourage the adoption of digital payments. While these efforts have produced results, as visible in the huge growth of digital payments, there is still a lot more to be done,” Malhotra added.

Malhotra, who gave up his role as revenue secretary to the Finance Ministry, is the 26th Governor of RBI for a three-year term starting December 2024. Last month, he reduced India’s benchmark rate for the first time in nearly five years, with economists anticipating further rate cuts in April. The central bank expects the country’s growth for the fiscal year starting on April 1 to touch 6.7%, at a time when the United States-China trade war is intensifying, tariffs are imposed on trading partners, and the global economy seems to be approaching a critical juncture similar to the 2008 Global Financial Crisis.

Digital payment for economic growth

“Payments through digital modes support economic growth. They also deepen financial inclusion by overcoming barriers like high transaction costs and geographical limitations. In effect, digital payments are not just convenient but are also a powerful tool for economic empowerment and growth,” Malhotra pointed out.

He explained that payments are the “lifeblood of commerce,” enabling the flow of goods and services in an economy. 

However, surveys show that nearly 40% of India’s adult population still does not use digital payments. Malhotra said that one of the main reasons for this is the lack of awareness or familiarity with digital payments. 

To help the public understand digital payments, the RBI observes Digital Payments Awareness Week (DPAW) every March. As part of this endeavor, the “Har Payment Digital” mission was launched in 2023 to promote digital payments by enhancing awareness among all citizens and making available the necessary infrastructure and solutions for people to make payments digitally. 

The 5th DPAW is being observed from March 10-16 with a theme, “India Pays Digitally,” reflecting the nation’s transformative journey toward a digitally empowered citizenry with the ubiquity and convenience of digital payments. 

DPAW is an initiative to highlight the impact and importance of digital payments and to create awareness about the safe usage of digital payment products. During the week, the RBI, along with payment system operators, banks, and other stakeholders, will conduct nationwide awareness activities, including multimedia campaigns, on-ground educational programs, and social media-based outreach.

“The objectives of Mission Har Payment Digital can be achieved only with the active participation of all stakeholders. Geographies and population segments, lagging behind in usage and awareness of digital payments need to be identified and suitable steps taken to expand awareness and improve usage,” Malhotra pointed out.

RBI’s regional offices also conduct awareness programs called eBAAT. RBI has been performing these programs since 2012, and in the last eight years, more than 1,800 such programs have been conducted. Malhotra said that in 2025, the content and method of delivery of eBAAT will be reviewed, and a pilot will be conducted with the objective of reaching “a very large number of people in the most efficient way.”

Encourage innovation while tackling risks

Malhotra said that RBI will continue to encourage innovation in payments while being mindful of risks and taking appropriate measures to mitigate them. 

“We will promote innovation to facilitate payment systems that are fast, safe, secure, accessible and resilient. We have adopted a soft-touch approach to regulating the payments ecosystem and FinTech,” he said.

Through these regulations, the RBI intends to balance these divergent expectations. Malhotra said the RBI’s approach has been to establish regulatory guardrails within which all stakeholders are free to operate. 

“We will continue to encourage innovation while promoting safety and security through soft-touch regulations,” Malhotra added.

Watch: India is going to be the frontrunner in digitalization