India allows cross-border payments: NRIs will soon be able to pay bills directly in India
New RBI route for Non-Resident Indians to pay bills electricity, telephone and other bills
Dubai: Non-Resident Indians (NRIs) no longer need to pay routine bills of their families in India by sending money to their India-based accounts. They can now pay directly from wherever they are overseas by using a new government bill payment portal.
The Reserve Bank of India (RBI) has allowed NRIs to pay bills through Bharat Bill Pay System (BBPS), a payment portal of National Payments Corporation of India (NPCI), an initiative of RBI and Indian Banks’ Association (IBA) enabling digital payments and settlement systems in India.
“This will make life of NRIs easy by enabling direct bill payments in India through BBPS and avoid unnecessary delays when they send money to their account in India to make such a payment,” said Dixit Jain, managing director at The Tax Experts DMCC, a Dubai-based tax advisory firm.
The Reserve Bank of India (RBI) has allowed NRIs to pay bills through Bharat Bill Pay System (BBPS), a payment portal of National Payments Corporation of India (NPCI), an initiative of RBI and Indian Banks’ Association (IBA) enabling digital payments and settlement systems in India.
“This will make life of NRIs easy by enabling direct bill payments in India through BBPS and avoid unnecessary delays when they send money to their account in India to make such a payment,” said Dixit Jain, managing director at The Tax Experts DMCC, a Dubai-based tax advisory firm.
What payments can be done through BBPS and how?
With the latest RBI move, NRIs will be able to make direct payments of various utilities such as water bills, electricity bills or telecom for their respective families in India via the BBPS platform. Apart from paying bills using a card that’s linked to their Indian accounts, NRIs now have an alternative.
BBPS, which is a one-stop financial framework for payment of bills that is accessible at any point in time and from anywhere, has enabled various payment options such as payment via cards (credit or debit), NEFT (National Electronic Funds Transfer), UPI (Unified Payments Interface) or digital wallets.
The transaction can also be initiated through both digital channels such as internet, internet banking, mobile, mobile banking, POS (Point of Sale terminal), MPOS (Mobile Point of Sale terminal), kiosk, and offline channels like ATM, bank branch, agents and business correspondents.
UPI is an instant real-time payment system developed by National Payments Corporation of India, and facilitates inter-bank peer-to-peer and person-to-merchant transactions.
A point-of-sale (POS) terminal is a computerised replacement for a cash register which can process credit and debit cards. A customer needs to enter a card PIN to complete the transaction using the PoS terminal.
Additional details awaited from RBI on NRI usage
This facility, which the RBI governor said is aimed at helping senior citizens in particular, has over 20,000 billers as part of its system and more than 80 million transactions are processed on a monthly basis. However, this system is currently available to only residents in India.
“It is now proposed to enable Bharat Bill Payment System (BBPS) to accept cross-border inward bill payments. Necessary instructions will be issued shortly,” noted the RBI governor, Shaktikanta Das, in a statement recently.
“Enabling BBPS to accept cross-border inward bill payments will help entities with cross-border remittance licenses and enable easy payments from NRIs who otherwise have been facing challenges in utility bill payments on behalf of their families in India,” said India-based tax consultant Brijesh Meti.
The Indian government is widely expected to keep electronic transactions under the Bharat Bill Payment System (BBPS) free of cost after Indian Finance Minister Nirmala Sitharaman said that “it was not the right time to make digital payments like UPI chargeable”.
RBI decision in line with recent NRI-focused moves
The latest move followed RBI removing the cap on interest rates on foreign currency non-resident bank (FCNR) and non-resident external (NRE) account deposits for the period from the July 7 to October 31, and this was followed by banks raising rates on NRI deposits at several banks.
On the other hand, an NRE account is a bank account opened in India in the name of an NRI, to park his foreign earnings. In an NRE deposit, the currency deposited from overseas is converted to the rupee.
Indian residents can also open and maintain these deposits as joint holders with an NRI relative, but as the money has to come from outside India, Indian joint account holders can’t make deposits. The money from both types of deposits is repatriable or transferrable.
What it meant for NRIs looking to invest in FDs during the four-month window is that the agreed-upon rates locked on new deposits will be for the entire tenure. Also, interest earned from these deposits is exempt from tax in India.
These last two RBI moves came amid massive pressure on the Indian rupee against the US dollar and falling forex reserves in the country. NRI deposits have declined to $139.02 billion (Dh510 billion) at the end of March this year, down from $141.89 billion (Dh521 billion) a year ago, according to RBI data.
Declines recorded in NRIs making FDs in the past year
“Over the past year, NRIs evidently found it less attractive to invest in Indian deposits because of the rise in yields globally and the risk of a depreciating currency. However, with RBI raising interest rates, these NRI deposits may find their way into India,” Meti added.
“However, the forex flows would not be as significant as 2013, when the rupee breached the 68 to the US dollar mark and RBI then had to announce measures on NRI deposits, which were made attractive with a subsidised rate window, bringing in $34 billion (Dh124 billion) in forex.”
BBPS is the third NRI incentive in three months, with new guidelines also announced in June on allowing resident Indians to receive more money from overseas relatives. Limits were amended to Rs1 million (Dh46,300), versus earlier when Indians were permitted to receive up to Rs100,000 (Dh4,630) in a year.
This will make life of NRIs easy by enabling direct bill payments in India through BBPS and avoid unnecessary delays when they send money to their account in India to make such a payment
Will enabling NRI bill payments also benefit the economy?
“By easing cross border inward bill payments, convenience will improve along with the forex inflow. It is crucial to acknowledge that NRIs play a substantial role in the management of billers on behalf of their family members in India,” opined Meti, while flagging that nearly a quarter of the nation’s income and the economy is contributed by utilities such as electricity, education fees, and bill payments.
However, not all experts feel so, as some consider this move to be more of a definite sign that the RBI has now taken on a more favourable stance in matters relating to NRI payments moving into the country, more than this decision seen improving forex levels, and as a result, the Indian economy.
Regardless of economic benefit, NRIs are seen as the biggest beneficiary of the move. Additionally, this also promotes the adoption of BBPS by global bill payment ecosystems.
“Similar to the global adoption initiatives of UPI by various governments, this will promote the adoption of BBPS by global bill payment ecosystems. The next step in developing a global powerhouse of bill payment systems will be achieved if we can enable international billers to use a single system, as RBI lead NPCI has done with BBPS,” Meti added.