UPI FOR NRIs
CONTEXT:
- Recently, National Payments Corporation of India (NPCI) has brought in the mechanism for international (phone) numbers to be able to transact using UPI.
BUDGETARY MENTION:
- Union Cabinet also approved an incentive scheme for the promotion of RuPay debit Cards and low value BHIM UPI transactions (person to merchant) in FY 2022-23.
- The scheme has an outlay of ₹2,600 crore.
WHAT IS Unified Payments Interface (UPI) ?
- It is a system developed by National Payments Corporation of India (NPCI), for real-time payment system that helps in instant and quick transfer of funds between two bank accounts.
- It allows the money transfer between any two bank accounts by using a smartphone both online and offline, without the hassle of mentioning credit card details, IFSC code etc.
- In 2018 the National Payments Corporation of India (NPCI) launched an upgraded version of UPI 2.0.
DIFFERENCE BETWEEN BHIM & UPI:
- UPI is a platform created by National Payments Corporation of India, for inter-accounts transactions ,on the other hand BHIM is a separate mobile wallet app just like PhonePe, Amazon Pay etc.
- BHIM is a unified payment app based on UPI which can be synced to any of the UPI enabled bank accounts.
- The BHIM outperforms over its alternatives as no charges are associated with the transfer, unlike other payment apps.
- There is no need to recharge BHIM payment apps. There are no commission charges or hidden charges.
GROWTH OF UPI:
- As per latest available data, 6,779.6 million transactions worth about ₹10.95 lakh crore have been facilitated using UPI.
- As per the Digi Dhan dashboard maintained by the Ministry of Electronics and Information Technology, BHIM-UPI accounted for 52% of all digital payments in FY 2021-22.
- At present the data stands at 59.74%.
NEW ARRANGEMENTS:
- Non-resident accounts such as non resident external accounts (NRE) and non resident ordinary accounts (NRO) having international numbers will now be allowed into the UPI payment system.
- NPCI had also allowed UPI transactions to and from NRO/NRE accounts linked to Indian numbers back in October 2018.
- At present, users from ten countries will be able to avail the facility— Singapore, Australia, Canada, Hong Kong, Oman, Qatar, the U.S., Saudi Arabia, UAE, and the U.K.
- To provide UPI services to non-resident account types like NRE/NRO accounts having international mobile numbers subject to the following conditions:1) Member banks must ensure NRE or NRO accounts are only allowed as per the extant FEMA (Foreign Exchange Management Act) regulations and adherence to the guidelines/instructions issued by the concerned regulatory departments of the Reserve Bank of India (RBI) from time to time.2) All necessary anti-money laundering/ combating of financing of terrorism checks and compliance validation as per the rules have to be ensured by the remitter and beneficiary banks.
WHAT ARE NRE & NRO ACCOUNTS?
- NRE accounts are those used by non residents to transfer earnings from foreign country to India.
- NRO accounts are used to manage the income earned in India by the non residentials. These incomes could be rent, interest, pension, among other things.
BENEFITS OF NEW MECHANISM:
- This development would allow NRIs to use the payment method for making utility bill payments for their families (or for themselves) in India.
- They can make purchases from e-commerce or online platforms using UPI. Thus accelerating the growth and sales of products in market.
- They can also make payments to physical merchants who accept UPI QR based payments when they travel to India.
- New system will lead to growth of digital payments ecosystem and overall economic growth of the country.
ISSUE OF MERCHANT DISCOUNT RATE (MDR):
- The Merchant Discount Rate (MDR) is the charge recovered by the acquirer from the final recipient of the payment, that is, the merchant.
- It is collected by the acquirer to compensate the varied service providers and intermediaries in the payment system.
- Currently, no MDR charge is levied for RuPay based debit card and UPI transactions, as NPCI wanted the incentivisation of BHIM UPI and RuPay debit card transactions to create “cost effective value proposition for ecosystem stakeholders, increase merchant acceptance footprints and faster migration from cash payments to digital payments.”
SOURCE : THE HINDU
SYLLABUS: GS3, INDIAN ECONOMY & BANKING
