By Siddhi Nayak and Xinghui Kok
MUMBAI (Reuters) -India and Singapore launched on Tuesday a real-time link to facilitate easier cross-border money transfers between the two countries, the first such for the South Asian nation that is the world's biggest recipient of remittances.
Transfers of funds between the two countries will now be possible using just mobile phones due to the tie-up between India's Unified Payments Interface (UPI) and Singapore's PayNow facility.
Such arrangements, which are a growing trend in Asia, typically lower the costs of payments. Singapore has already established a cross-border payments link with Thailand and is working on one with Malaysia, according to the website of the city-state's central bank.
"This will enable people from both the countries to immediately and at low-cost transfer funds (by) just using their mobile phones," Indian Prime Minister Narendra Modi said at a virtual event for the launch of the service. The linkage will help migrant workers, professionals, students and their families, said Modi.
UPI is an instant real-time payments system, allowing users to transfer money across multiple banks without disclosing bank account details. Similarly, PayNow is a service offered by participating banks that allows sending and receiving Singapore dollar funds from one bank to another using a mobile number.
Singapore's Prime Minister Lee Hsien Loong told the launch event cross-border retail payments and remittances between the two countries currently amount to over $1 billion annually.
"The UPI-PayNow linkage will grow in utility and will contribute more in facilitating trade," Lee said.
India received $89 billion in foreign remittances in 2021/22, the highest ever in a year by any nation. The World Bank has projected that number to rise to $100 billion in the current year.
"This interlinkage aligns with the G20's financial inclusion priorities of driving faster, cheaper and more transparent cross-border payments...," the Reserve Bank of India (RBI) said in a statement.
In the India-Singapore link, to begin with, State Bank of India, Indian Overseas Bank, Indian Bank and ICICI Bank will facilitate both inward and outward remittances while Axis Bank and DBS India will facilitate inward remittances, RBI added.
For Singapore users, the service will be made available through DBS-Singapore and Liquid Group - a non-bank financial institution. More number of banks will be included in the linkage over time, it added.
Initially, an Indian user can remit up to 60,000 Indian rupees ($725.16) a day.
($1 = 82.7400 Indian rupees)