Geopolitical Risks in Cross-Border Payments
The Reserve Bank of India (RBI) highlights the impact of geopolitical risks, such as sanctions and restrictions, on cross-border payments. These factors significantly affect financial flows due to the centralized global financial infrastructure and reliance on a few settlement currencies.
Challenges and Responses
- Sanctions and operational barriers can disrupt market access and payment channels.
- Affected countries are considering bilateral or multilateral alternatives to mitigate disruptions.
RBI's Initiatives
- Payments Vision Document 2025: RBI is working to reduce global payment system friction.
- Inward remittance delays are being addressed through a review to expedite settlements.
- Efforts are being made to link India's UPI with other countries' fast payment systems (FPS):
- This aims to simplify personal remittances and enable QR-based UPI payments abroad.
International Collaborations
- Project Nexus: India collaborates with Malaysia, the Philippines, Singapore, and Thailand to interlink domestic FPSs for instant cross-border retail payments.
- UPI-based QR payments are available in Bhutan, France, Mauritius, Nepal, Singapore, the UAE, and Qatar.
India's Remittance Leadership
- India received a record $137.7 billion in remittances in 2024, more than double Mexico's $67.6 billion.
- This emphasizes India's significant role in the global remittance market, supported by a vast overseas workforce.
Expansion of Domestic Payment Ecosystem
- Transaction volumes increased from 3,248 crore in 2019 to 20,849 crore in 2024.
- Total transaction value rose from Rs 1,775 lakh crore to Rs 2,83,010 lakh crore in the same period.
- In the first half of 2025, volumes reached 12,549 crore, with transactions worth Rs 1,572 lakh crore.
