Travellers to India can now use UPI for retail payments: RBI

Apart from announcing the key decisions on policy rates and sharing forecasts on GDP and inflation, the Reserve Bank today announced a range of measures concerning financial markets, regulation, payment and settlement systems and currency management.

With regards to the payment and settlement systems, the RBI has proposed to allow all inbound travellers to India to access Unified Payments Interface(UPI) for their merchant payments (P2M), while they are in the country.

According to the RBI, to start with, this facility will be extended to travellers from the G-20 countries arriving at select international airports. "Going forward, this facility will be enabled across all other entry points in the country. Necessary operational instructions will be issued shortly."

The G-20 nations comprise countries like Argentina, Australia, Brazil, Canada, China, EU, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Turkey, UK and USA.

UPI transactions surged to their all-time high both in terms of value and volume at 8,036.89 million and ₹12,98,726.62 crore in January 2022.

Notably, the National Payments Corporation of India (NPCI), the umbrella body for operating retail payments and settlement systems in India, is also planning to allow non-resident Indians (NRIs) to make payments in UPI without the need for an Indian mobile number.

For a start, the NPCI will allow this facility for NRIs across 10 countries, wherein they'll be able to transfer funds via the UPI platform from their NRE (non-residential external)/NRO (non-resident ordinary) accounts. The countries that have been included in the list are Singapore, Australia, Canada, Hong Kong, Oman, Qatar, USA, Saudi Arabia, United Arab Emirates and the United Kingdom.

The NPCI has asked all member partner banks to comply with its directives by April 30, 2023.

In addition to that, the RBI has also said that to provide further impetus to TReDS (Trade Receivables Discounting System) platforms, their scope of activity will now be expanded to further improve the cash flows of MSMEs. The RBI added that it’ll also allow insurance facility on TReDS.

"This will encourage financing or discounting of payables of buyers irrespective of their credit ratings. Accordingly, insurance companies will be permitted to participate as a “fourth participant” on TReDS, apart from the MSME sellers, buyers and financiers."

The central bank said all entities or institutions eligible to undertake factoring business under the Factoring Regulation Act will be permitted to participate as financiers in TReDS. Also, the secondary market operations will now be enabled on TReDS platforms, which will allow financiers to offload their existing portfolio to other financiers on the same platform.

Notably, the guidelines on TReDS were issued in December 2014 to facilitate the financing of trade receivables of MSMEs. Subsequently, three entities started operating TReDS platforms and two more entities have been granted in-principle authorisation. These entities process about ₹60,000 crore worth of transactions annually, says the central bank.

To improve the distribution of coins among members of the public, the Reserve Bank of India is also preparing a pilot project on QR Code-based Coin Vending Machine (QCVM) with a few leading banks. The QCVM is a cashless coin dispensation machine, which would dispense coins against debit to the customer’s bank account using UPI.