India boosts cross-border payments with regional allies

India is expanding its payment systems with regional neighbors, including Sri Lanka, Bhutan, Nepal, and the UAE, aiming for seamless financial transactions.

Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar highlighted these initiatives at a conference in Cebu, Philippines.

Sankar noted, “We have one arrangement with Sri Lanka. We are working out with other countries like UAE and some neighboring countries as well.”

The RBI is actively collaborating with ASEAN central banks to create an instant cross-border payment platform.

Existing ties with Bhutan and Nepal offer a foundation for further integration with other nations in the region.

India is cautiously piloting its central bank digital currency, ensuring security and evaluating potential impacts.

Sankar stated, “We are in no hurry to roll it out immediately. Once we have some visibility of what the outcome or impact will be, we’ll roll it out.”

RBI Governor Shaktikanta Das views CBDCs as a “future form of money,” essential for cost-effective cross-border payments, trade settlements, and remittances.

India has expressed interest in providing technical solutions to countries seeking common standards for cross-border payments.

Under its G20 presidency, Finance Minister Nirmala Sitharaman emphasized the need for international frameworks to manage risks tied to digital assets.

India has not formalized specific cryptocurrency regulations but is monitoring the sector closely.

The government has implemented a 30% tax on crypto gains and a 1% Tax Deducted at Source (TDS) on transactions exceeding ₹50,000.

Sitharaman has stressed international cooperation to address the challenges posed by cryptocurrencies.

India’s efforts highlight its dual focus on strengthening traditional payment systems and advancing digital currency solutions.

The cautious approach to CBDC deployment reflects the RBI’s prioritization of stability and security in financial innovation.