India Expands Payment Ties With Regional Partners to Strengthen Cross-Border Financial Networks

India’s expanding payment ties with nations like UAE and Sri Lanka highlight a push for seamless transactions, paired with cautious central bank digital currency (CBDC) advancements.

India’s Growing Regional Payment Ties Signal a New Financial Era

India is broadening its payment linkages with several nations, including Sri Lanka and the United Arab Emirates (UAE), as part of its efforts to strengthen cross-border financial networks. Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar discussed these developments on Wednesday during a conference in Cebu, Philippines. Highlighting existing collaborations, Sankar said:

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

He also noted that India has “some arrangements” with Bhutan and Nepal. The RBI is working with central banks in the Association of Southeast Asian Nations (ASEAN) region to create a cross-border platform for instant payments.

Sankar also commented on the central bank’s digital currency progress. India has already launched central bank digital currency (CBDC) pilots, but the RBI is taking a cautious approach to its wider rollout. Sankar emphasized:

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. We don’t keep a specific timeline for that.

The RBI is examining the security of digital currencies and their effects on monetary policy and banking systems. RBI Governor Shaktikanta Das has described CBDCs as “the future form of money and the most cost-effective solution for cross-border payments, trade settlements and remittances.” He also recently expressed willingness to provide “technical solutions to any country interested in establishing common international standards for cross-border payments.”

India hasn’t introduced specific cryptocurrency regulations yet, but it has taken steps toward monitoring and taxing digital assets. The government has imposed a 30% tax on crypto gains and a 1% Tax Deducted at Source (TDS) on transactions exceeding ₹50,000.
India’s Finance Minister Nirmala Sitharaman has emphasized the necessity for international collaboration to address the associated risks of crypto transactions. Under India’s G20 presidency, she highlighted the importance of developing a common framework for all countries to manage the challenges posed by digital assets. #Write2Earn