After opening up cross-border transactions such as bill payments and RuPay credit cards to non-resident Indians (NRIs), NPCI or National Payments Corporation of India recently eased the use of its most popularly payment option, UPI (Unified Payment Interface), to this segment of users. They will be able to link their non-Indian mobile phone numbers, or the mobile number commonly used by them in their countries, to make payments through UPI.
What are the transactions it covers?
All the present use cases of UPI will be available to NRIs who opt to use this facility. It can cover retail as well as wholesale transactions.
How does the process work?
The user should first link the mobile number with an NRO or NRE (non-resident ordinary or non-resident external) account. The member bank whose accounts are being linked by the customer needs to ensure that the required KYC (Know Your Customer) is done as per the governing laws, including the Foreign Exchange Management Act or FEMA.
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The onus of compliance will rest with the respective banks and hence procedures laid down by the RBI in this regard should also be complied with. In addition to this, the remitter and beneficiary banks (that is, the bank through which the payment is initiated and the bank which is receiving the payment) need to have the required checks and compliance validations with respect to anti-money laundering (AML) rules.
How is the proposed mechanism better than the existing one?
Even now, NRIs can use the UPI app for payments. However, being a sim-linked payments process, they needed an Indian mobile phone number. This meant that to keep the number alive, they had to pay the phone bills or top-up the number, in case it is a pre-paid connection.
By linking the accounts with a non-Indian sim card, the maintenance cost is eliminated. That said, the level of compliance by banks may increase if the user migrates from an Indian mobile number to a foreign number. Even under the existing mechanism, the linkage of the mobile number is with NRO/NRE. With the migration to a foreign number, the FEMA and AML related compliances which the member banks must undertake will increase and that is not the case at present.
Is UPI extended to NRIs across all countries?
No. The first phase of rollout is extended only to ten countries — Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the US, Saudi Arabia, United Arab Emirates and the UK.
When does it come into effect?
From April 30, NRIs will be able to use UPI from their non-Indian mobile numbers for payments. NPCI is presently working with its member banks for the back-end integration including the validation processes and linking of phone numbers.