PM Dahal India Visit: Nepal and India to Pen Agreement for Trans-national Electronic Payments through QR Codes

Nepal and India are set to enhance their financial cooperation through a bilateral agreement that will enable cross-border electronic payments using QR codes. The agreement will be signed during the visit of Nepal's Prime Minister Pushpa Kamal Dahal 'Prachanda' to India, marking a significant step towards strengthening digital payment systems between the two countries.

Under the agreement, Nepal Clearing House Limited (NCHL), which has developed an electronic payment system with the investment of Nepal Rastra Bank (NRB), will integrate its system with the National Payment Corporation of India (NPCI), backed by the Reserve Bank of India (RBI). This integration will facilitate seamless electronic transactions between Nepal and India through QR codes, allowing citizens to make payments using their mobile banking and mobile wallet applications.

It has been learnt that NCHL CEO, Neelesh Man Singh Pradhan, will be present during the agreement signing. However, it is worth noting that there will be no representative from the NRB on this visit. The collaboration between NCHL and NPCI aims to bridge the digital payment gap and provide citizens with a convenient and efficient mode of conducting cross-border financial transactions. 

Currently, while cross-border payments for goods and services can be made through cards, financial transactions through QR codes are not possible. This agreement will bridge that gap, enabling Nepalese citizens to make digital payments in the Indian market and Indian citizens to do the same in Nepal simply by scanning QR codes.

The integration between Nepal Clearing House and NPCI will be facilitated through the Unified Payments Interface (UPI) system operated by NPCI in India. UPI allows for inter-bank fund transfers, bill payments, and QR code-based transactions within the country. The integration will enable similar transactions between Nepal and India, further promoting financial connectivity and ease of doing business.

It is important to note that Nepal's capital account is currently not fully open on both sides, meaning there are restrictions on fund withdrawals from Nepal. However, foreign investment in Nepal remains open. To ensure a smooth and controlled flow of funds, the NRB has set transaction limits for foreign exchange activities, including payments and cash withdrawals in India through credit cards, debit cards, and prepaid cards.

As this agreement is implemented, Nepalese citizens will have increased access to digital payment options in the Indian market, while Indian citizens visiting Nepal will enjoy the convenience of QR code-based transactions. The move is expected to benefit both countries and promote economic cooperation through seamless cross-border financial integration.

This agreement is an important step towards embracing digital payment technologies and fostering financial inclusion in the region. By leveraging the expertise and infrastructure of NCHL and NPCI, Nepal and India are poised to unlock the potential of cross-border electronic payments, contributing to economic growth and strengthening bilateral ties. 

Prime Minister Dahal's official four-day visit to India has been scheduled for May 31-June 03, as confirmed earlier by Ministry of External Affairs (MEA), India and Ministry of Foreign Affairs (MoFA), Nepal.