Are Global Tensions Threatening Cross-Border Payments? RBI Raises the Red Flag

RBI warns that global politics may soon start touching the wires that move our money.

Strange times for money movement. The Reserve Bank of India’s Payments System Report 2025 has warned that ongoing global tensions are quietly reshaping cross-border payments. India got US $137.7 billion in remittances last year, the highest in the world, yet even that flow isn’t fully safe anymore.

The central bank said that the impact of global tensions on cross-border payments is now visible in every major corridor. Small frictions, like sanctions, blocked routes, and tighter bank checks, slow down transfers. 

These may look minor but together they threaten international financial stability, the RBI wrote. Feels like the system is only as strong as the politics behind it.

What’s Really Going Wrong in Global Money Transfers?

Cross-border transfers still depend on a handful of currencies and long chains of banks. Each extra stop adds cost and time. During a crisis, one blocked link can freeze thousands of payments.

To explain what the RBI pointed out, here’s a simple table showing the usual cracks in the system.
 

These are the very challenges in global money transfers amid geopolitical risks that the RBI wants to fix. And not just through talk. 

India’s low remittance cost of 2.10 percent (for Kuwait to India transfers, as per the World Bank 2024 report) shows that digital reforms like UPI are working. But one global shock could undo years of progress. That’s how we see it anyway.

Are RBI’s Concerns About Global Payment Risks New?

Not really. Central banks have worried about international payment systems since the Russia-Ukraine war began. But the RBI’s latest tone feels sharper. It wants stronger domestic protection in case major countries split payment routes.

India has already linked its UPI with Singapore’s PayNow system. It works fine for now, though experts say future risks might come from the aggregator side. The RBI’s Cross-Border Payment Aggregator (PA-CB) rules, issued in October 2023, made this clear: any non-bank handling foreign transactions must have ₹ 15 crore capital, rising to ₹ 25 crore in three years.

Here’s how a few regions have handled similar payment reforms.
 

The RBI says these measures can cushion shocks, but admits more corridors need backup. Small fintechs may struggle with the new rules. Feels tough, but maybe necessary.

Conclusion 

This time, regulators moved before any collapse. That’s new. Earlier, actions came after some crisis, like after remittance delays in 2020. The difference now is pre-emptive caution.

Banks have started reviewing overseas partners, and fintechs are re-checking their settlement chains. LoansJagat called this “a clean-up phase for cross-border aggregators,” noting that many small players may exit because of the high net worth demand. The RBI seems ready to trade quantity for safety.

So, what’s next? The tone of this report says the problem isn’t in technology but in trust. As global politics harden, money must find its way through tighter gates. And India, for all its progress, sits right in the middle of that storm.
 

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