Favara-UPI Cross-Border Payment Corridor (Economy)
Favara-UPI Cross-Border Payment Corridor (Economy)
Why In News:
The Maldives Monetary Authority announced on 30 July 2026 that its instant payment system, Favara, has gone live in integration with India's Unified Payments Interface (UPI), enabling real time cross-border money transfers between the two countries.
Source: PIB, 31 July 2026, item on 'UPI Cross-Border Corridor: India-Maldives Operational'.
Key points:
Mechanism: Transactions initiated in Maldivian Rufiyaa are instantly credited to recipients' bank accounts in India in Indian Rupees through UPI.
Institutions Involved: Implemented through collaboration between the Maldives Monetary Authority, the Reserve Bank of India, and NPCI International Payments Limited (NIPL).
Timeline: The integration agreement was signed between NIPL and the Maldives Monetary Authority in July 2025.
Next Phase: Future phases will add QR code based merchant payments and other cross-border digital payment services.
Key Facts for Prelims
NPCI: The National Payments Corporation of India (NPCI) is a not-for-profit company set up by the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA) under the Payment and Settlement Systems Act, 2007.
It functions as the umbrella organization for managing and operating retail payment and settlement systems in India.
Key initiatives by NPCI include the RuPay payment network, Unified Payments Interface (UPI), and interlinking of ATMs across the country.
National Payments Corporation of India, set up under the Payment and Settlement Systems Act, 2007, and operates UPI, RuPay, and IMPS.
NIPL: NPCI International Payments Limited, a wholly owned subsidiary of NPCI incorporated in 2020 to take Indian payment systems global.
Unified Payments Interface (UPI): UPI is a real-time mobile payment system developed by the National Payments Corporation of India (NPCI).
It enables users to link multiple bank accounts within a single app for seamless peer-to-peer (P2P) and merchant transactions.
Working: UPI supports both push (send) and pull (receive) transactions using a Virtual Payment Address (VPA).
It ensures security through two-factor authentication, removing the need to repeatedly enter bank details.
Technologies Used:
Built on Immediate Payment Service (IMPS) infrastructure
Integrates with Aadhaar Enabled Payment System (AePS)
Global Footprint: UPI based payment services are now operational in nine countries outside India.
IMPS: Facilitates instant fund transfer using mobile number & MMID or account number & IFSC of the beneficiary.
AePS: Enables basic banking services like cash withdrawal, deposit, balance enquiry, and fund transfer using Aadhaar-based authentication.