MoU Signed to Launch UPI in Cyprus for Cross-Border Payments

Key Points for SSC, UPSC, and Other Government Exams

  • India and Cyprus signed an MoU to introduce UPI services in Cyprus.
  • The agreement aims to ease cross-border payments for tourists and businesses.
  • Cyprus is among the top 10 sources of FDI for India with $15 billion cumulative inflow.
  • India-Greece-Cyprus Business and Investment Council launched for trilateral cooperation.
  • NSE International Exchange at Gift City signed MoU with Cyprus Stock Exchange.
  • Two-way trade between India and Cyprus stood at $137 million in 2023-24.

Complete Details

Introduction

India’s digital payments ecosystem is set to expand its global footprint with the signing of a memorandum of understanding (MoU) between National Payments Corporation of India (NPCI) and Eurobank of Cyprus. This move will introduce Unified Payments Interface (UPI) services in Cyprus, enhancing ease of cross-border transactions for tourists, businesses, and investors.

Key Agreements and Significance

The MoU was signed during Prime Minister Narendra Modi’s official visit to Cyprus. The introduction of UPI services in Cyprus is expected to:

  • Strengthen financial cooperation.
  • Facilitate faster, cheaper, and seamless cross-border payments.
  • Benefit Indian tourists, students, and the business community in Cyprus.

Additionally, the NSE International Exchange at Gujarat’s Gift City inked an agreement with the Cyprus Stock Exchange. This pact aims to promote cross-border investment flows between India, Cyprus, and Europe.

Cyprus-India Economic Relations

  • Cyprus is a major foreign investor in India, with cumulative FDI inflows of nearly $15 billion.
  • Trade between the two countries touched $137 million in 2023-24, with India exporting pharmaceuticals, textiles, machinery, iron & steel, and chemicals.
  • A business roundtable co-chaired by Modi and Cypriot President Nikos Christodoulides mapped out a roadmap for enhanced cooperation in defence, logistics, digital tech, AI, shipping, and mobility.

Strategic Importance

Cyprus’s location at the crossroads of Europe and the Mediterranean positions it as a gateway for Indian businesses expanding into these regions. The establishment of the India-Greece-Cyprus Business and Investment Council further signals India’s intent to build robust trilateral cooperation, especially in shipping, civil aviation, renewable energy, logistics, and digital services.

About Cyprus (For Exams)

  • Capital: Nicosia
  • Currency: Euro
  • President: Nikos Christodoulides
  • Location: Eastern Mediterranean, member of the European Union
  • Key fact: One of the top 10 sources of FDI into India
  • Strategic importance: Acts as a gateway to Europe and Mediterranean for India

Exam-Relevant MCQs

1. Which bank of Cyprus signed an MoU with NPCI for UPI services introduction?
A) Bank of Cyprus
B) Eurobank of Cyprus
C) Hellenic Bank
D) Alpha Bank
Answer: B) Eurobank of Cyprus

2. What is the cumulative FDI inflow from Cyprus into India?
A) $10 billion
B) $15 billion
C) $20 billion
D) $5 billion
Answer: B) $15 billion

3. What is the capital of Cyprus?
A) Limassol
B) Larnaca
C) Nicosia
D) Paphos
Answer: C) Nicosia

4. Which Indian city houses the NSE International Exchange that signed an MoU with Cyprus Stock Exchange?
A) Mumbai
B) Bengaluru
C) Hyderabad
D) Gujarat’s Gift City
Answer: D) Gujarat’s Gift City

5. India-Greece-Cyprus Business and Investment Council aims to promote cooperation in which sectors?
A) Only defence and shipping
B) Shipping, logistics, renewable energy, civil aviation, digital services
C) Banking and finance only
D) Agriculture and fisheries
Answer: B) Shipping, logistics, renewable energy, civil aviation, digital services

UPSC-Style FAQs (With Proper Answer Writing Format)

Q1. What is the significance of India introducing UPI services in Cyprus in the context of India’s financial diplomacy?

Answer:
India’s initiative to introduce UPI services in Cyprus through an MoU between NPCI and Eurobank of Cyprus reflects a strategic step in its financial diplomacy. It enhances India’s soft power by exporting its successful digital payments model, aiding in faster, more cost-effective cross-border transactions. This move is in line with India’s efforts to internationalise UPI and promote financial inclusion on a global scale. Further, it complements India’s broader objective of strengthening economic ties with the European Union and Mediterranean regions via Cyprus’s strategic geographical location.

Q2. Examine the role of Cyprus in India’s foreign direct investment inflow and its strategic partnership.

Answer:
Cyprus plays a pivotal role in India’s FDI inflow, ranking among the top ten sources with cumulative investments amounting to approximately $15 billion. This underlines its importance as a financial hub for routing investments into India. The strategic partnership is deepening with collaborations in digital payments, stock exchanges, and the creation of platforms like the India-Greece-Cyprus Business and Investment Council. The partnership enables India to access European and Mediterranean markets, thereby strengthening trade, investment, and technology cooperation.

Q3. Discuss how the MoU between NSE International Exchange and Cyprus Stock Exchange could impact India’s international financial integration.

Answer:
The MoU between NSE International Exchange at Gift City and Cyprus Stock Exchange represents a significant step in India’s financial integration with global markets. It facilitates smoother cross-border capital flows and enhances India’s attractiveness as a destination for international investors. The collaboration is likely to boost investor confidence, provide greater liquidity, and align Indian financial markets more closely with European standards, thus advancing India’s aspiration to emerge as a global financial hub.