India expands UPI to Maldives boosting digital ties

In a major step towards deepening digital and financial cooperation, India and the Maldives have signed a landmark Network-to-Network agreement between India’s NPCI International Payments Limited (NIPL) and the Maldives Monetary Authority (MMA), paving the way for the implementation of Unified Payments Interface (UPI) in the island nation. This move highlights the growing global recognition of India’s fintech leadership, with the UPI now processing over 100 billion transactions annually.

A Memorandum of Understanding (MoU) has been signed between India’s Ministry of Electronics and Information Technology (Meity) and the Maldives’ Ministry of Homeland Security and Technology to promote exchange of successful, scalable digital solutions. The goal is to accelerate digital transformation in the Maldives by leveraging India’s experience in implementing digital public infrastructure at scale.

The agreements come amid a broader strategic reset in India-Maldives relations, marked by Indian Prime Minister Narendra Modi’s announcement of a ₹4,850 crore (about $550 million) line of credit and a renewed framework for cooperation across critical areas—trade, defence, infrastructure, and digital connectivity. These initiatives underscore an urgent and forward-looking commitment to regional stability, economic integration, and technological advancement.

“During [the] President’s visit to India last October, we shared a vision for a comprehensive economic and maritime security partnership. That vision is now becoming a reality. As a result, our bilateral ties are reaching new heights, and several important projects have been inaugurated,” Modi said.

“We have taken several steps to accelerate our economic partnership. To boost mutual investment, we will soon work towards finalizing a Bilateral Investment Treaty. Discussions on a Free Trade Agreement have also begun…With the local currency settlement system, trade can now take place directly in Rupees and Rufiyaa. The rapid adoption of UPI in the Maldives will further strengthen both tourism and the retail sectors,” Modi added.

India’s UPI, a real-time payment system that supports peer-to-peer and merchant transactions, has seen explosive growth in recent years. In its latest annual report, the Reserve Bank of India (RBI) stated that during the financial year 2024-25, total digital payments recorded growth of 34.8% and 17.9% in volume and value terms, respectively.

“Moreover, the success of UPI placed India in a leadership position with a share of 48.5% in global real-time payments by volume,” RBI said in its report.

Overall, India and the Maldives signed several key Memorandums of Understanding (MoUs) covering vital sectors such as fisheries and aquaculture, meteorology, digital public infrastructure, Unified Payments Interface, Indian pharmacopoeia, and a new concessional Line of Credit (LoC). The newly extended Line of Credit, valued at ₹4,850 crore (approximately $550 million), is aimed at accelerating infrastructure development and other priority projects in the Maldives, according to an official statement.

In addition, an Amendatory Agreement was exchanged for the existing Lines of Credit, providing critical financial relief by cutting the Maldives’ annual debt servicing burden by 40%—from $51 million to $29 million. The two sides also exchanged the Terms of Reference for a proposed Free Trade Agreement, setting the stage for enhanced economic cooperation.

India shares digital infra as tool of soft power

India is one of the largest sources of tourists to the Maldives. With UPI, Indian travelers can now pay for hotels, transport, restaurants, and services using their familiar digital wallets, without the need to exchange currency. UPI also removes friction in the payment process, enhances convenience, and encourages greater tourist spending, directly benefiting the Maldivian economy.

This digital integration is also set to benefit local businesses by increasing efficiency, reducing transaction costs, and expanding access to a broader customer base. Small and medium-sized retailers, in particular, stand to gain from the increased ease of doing business. UPI will allow small businesses and local vendors in the Maldives to accept payments from tourists and residents using QR codes and smartphones, without expensive infrastructure. It can bring unbanked or underbanked Maldivians into the formal economy by promoting the use of digital financial services.

Overall, the growing use of UPI is poised to play a vital role in modernizing the Maldivian payment ecosystem, fostering economic activity, and deepening financial ties between India and the Maldives.

Impeccable timing

India’s expansion of UPI in the Maldives comes at a time when the Maldives government has set an ambitious target of attracting 300,000 Indian tourists in 2025. This push comes after a sharp drop in arrivals from India—once the top source of visitors—from first place in 2023 to sixth in 2024, amid diplomatic tensions between Malé and New Delhi.

Between 2020 and 2023, Indian travelers consistently topped the Maldives’ tourist arrival charts, particularly in the wake of the COVID-19 pandemic. However, relations took a serious hit in early 2024 after three Maldivian ministers made derogatory remarks about Indian Prime Minister Modi on social media. Their comments followed Modi’s public promotion of the Lakshadweep Islands as a tourist destination, when he posted photos and videos on his official X account.

But now, the Maldives government intends to reverse the trend and restore confidence among Indian tourists, who are crucial not only for visitor numbers but also for supporting the broader Maldivian economy. This is because tourism is the lifeblood of the Maldivian economy, serving as its primary source of income, foreign exchange, and economic stability. Despite the presence of other industries such as fishing and shipping, tourism remains the most vital contributor, accounting for roughly 21% of the country’s GDP (gross domestic product), according to the World Bank Group.

“Any shock to tourism could harm the growth outlook,” the World Bank stated in March 2025.

UPI transactions surge sharply, says SBI report

So far in 2025, UPI transactions have reportedly seen a sharp and urgent surge, both in value and volume, according to a recent report by the State Bank of India (SBI), the country’s largest lender. The data reveals that UPI is not just growing, it’s becoming an essential backbone of India’s digital payment infrastructure.

From January to July, the average daily transaction value climbed almost 7 percent, from Rs 75,743 crore (about $8.7 billion) to Rs 80,919 crore (roughly $9.3 billion). This growth has accelerated further in August, with the daily average soaring to Rs 90,446 crore (approximately $10.37 billion), reflecting a rapid shift toward digital transactions. The consistent rise underscores the deepening dependence on UPI for a wide range of payments across the country.

The volume of transactions has mirrored this momentum. In August, the average number of daily transactions reached 675 million, which has been up by 127 million since January. This dramatic increase signals that UPI is now the preferred method for everyday financial activities, from micro-transactions to large-value transfers.

This rapid expansion in UPI usage demonstrates the platform’s scalability and signals a transformative shift in how Indians conduct financial transactions, with digital payments becoming the new norm at an unprecedented pace.

Watch: India is going to be the frontrunner in digitalization

title=”YouTube video player” frameborder=”0″ allow=”accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share” referrerpolicy=”strict-origin-when-cross-origin” allowfullscreen=””>