In the context of India's digital payments infrastructure, what is the primary objective of the Reserve Bank of India's Project Nexus launched in recent years, and how does it aim to address the challenges in retail payment systems?
Show answer & explanation
Correct answer: B
Explanation
Solution: The correct answer is Project Nexus seeks to develop an interoperable, scalable, and resilient payment system that can handle high transaction volumes, reduce settlement risks, and unify various digital payment platforms to enhance efficiency and security.
Explanation:
☛ Project Nexus is an international initiative conceptualised by the Bank for International Settlements (BIS) Innovation Hub aimed at enabling instant cross-border retail payments.
☛ The Reserve Bank of India (RBI) joined Project Nexus to link India’s Unified Payments Interface (UPI) with the fast payment systems (FPS) of several Southeast Asian nations, including Malaysia, Singapore, Thailand, and the Philippines.
☛ Its primary objective is to create an interoperable, scalable, and standardized multilateral network that reduces the cost, time, and settlement risks associated with cross-border retail remittances.
☛ By interconnecting national fast payment systems directly rather than relying on multiple bilateral links, it provides high operational efficiency and security for cross-border financial transactions.
Extra Exam-Relevant Facts:
☛ Bank for International Settlements (BIS): Headquartered in Basel, Switzerland, it acts as a bank for central banks and fosters international monetary and financial cooperation.
☛ UPI-PayNow Linkage: In February 2023, India and Singapore launched the real-time cross-border payment link connecting India's UPI and Singapore's PayNow as a pioneering bilateral model.
☛ NPCI International Payments Limited (NIPL): Established in 2020 as a wholly owned subsidiary of the National Payments Corporation of India (NPCI) to deploy UPI and RuPay globally.
☛ Payment Vision 2025: An initiative by the RBI with the core theme 'E-Payments for Everyone, Everywhere, Everytime' (4Es) to provide safe, secure, and affordable digital payment options.
Important One-Liners for Upcoming Exams:
☛ Where is the headquarters of the Bank for International Settlements (BIS) located? → Basel, Switzerland
☛ Which international entity conceptualised Project Nexus for instant cross-border payments? → BIS Innovation Hub
☛ In which year was the Unified Payments Interface (UPI) officially launched by NPCI? → 2016
☛ Which was the first country with which India established a real-time cross-border payment link (UPI-PayNow)? → Singapore
☛ What is the full form of RTGS in banking transactions? → Real Time Gross Settlement