Helping hand to NRIs

In a move that is slated to benefit about 10 million Non-Resident Indians (NRIs), the National Payments Corporation of India (NPCI) is making the UPI interface accessible to NRIs from 10 countries.

This development comes close on the heels of Unified Payments Interface (UPI) becoming an acceptable form of payment in many countries.

UPI facilitated a massive 782 crore transaction worth ₹12.8-lakh crore in December 2022. This is set to increase with the new guidelines coming into effect this year.

Per the new regulations, NPCI has instructed its 382 member banks to facilitate the onboarding of the NRI accounts on the UPI platform. This new facility will be available for the NRIs residing in the US, UK, UAE, Saudi Arabia, Oman, Qatar, Australia, Canada, Singapore, and Hong Kong. The new regulations would help NRIs to make transactions without necessarily having an India-based number linked to their Non-Resident External (NRE)/Non-Resident Ordinary (NRO) accounts.

The advent of UPI has made the payment system seamless for residents in India. The usage of cash for even small payments has been replaced by UPI, especially in cities and towns. During our discussions with a few NRIs, they said that they would transfer money to some resident family member’s account and withdraw cash from the family member’s account or use that family member’s debit cards during their stay in India.

The other alternative was to use debit cards or credit cards they had in their resident nations. This would entail an additional currency conversion fee. Since the new regulation would help them pay in rupee denomination, this would also mean that NRIs could save on the currency conversion fees.

The onboarding of NRE/NRO accounts on the UPI platforms would also assist in making online transactions for gifts or other items on e-commerce platforms that they would like to send to their family members. UPI is also an acceptable mode of payment in the process of subscription to an IPO.

Per regulations, they need to inform the brokers that their UPI ID is to be used as the payment option. Under this arrangement, the instant fund transfer and instant mandate creation can be done in real-time during the application for an IPO.

It provides an opportunity for the NRIs to invest in stocks. The provision of UPI as a payment alternative offers another easy and hassle-free option for these NRIs during the application process of an IPO.

The restrictions

However, banks have to amend their policies on the transaction limit per UPI. NPCI states that the upper limit of transactions using UPI is ₹2 lakh.

However, banks and third-party apps have imposed their own restrictions on transactions and daily use. Some of these numbers are significantly below the limit mandated by NPCI. While these added restrictions may limit the probable financial damage in case of any erroneous transactions by the user, it also limits high-value transactions. If NRIs want to make a high-value payment through UPI, they might find themselves constricted by these limits. Banks must also relook at these limits if NRIs are to make full use of the facility.

With all its benefits, UPI has also been plagued by frequent downtimes. UPI had exhibited some restrictions in handling a high volume of transactions when numbers peak. The time given to its member banks to onboard the NRI accounts should also be utilised by NPCI to augment their robustness in handling a higher volume of transactions. If the trends stay, the number of transactions will continue to rise. To provide a seamless and hassle-free service to its users, NPCI must work towards reducing these bottlenecks in its operations.

Saravanan is a Professor of Finance, and Banerjee is a doctoral candidate at IIM Tiruchirappalli.

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