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1 Aug 2026INTERNATIONAL RELATIONS3 questions

Rufiyaa to Rupee in Real Time: The Favara-UPI Corridor and India's Quiet Payments Diplomacy

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Article summary

The Favara-UPI cross-border payment corridor went live between the Maldives and India on 30 July 2026, allowing individuals in the Maldives to send money to Indian beneficiaries in real time. Transactions are initiated in Maldivian Rufiyaa through the Favara payment rail and credited in Indian Rupees to UPI-enabled bank accounts. The corridor is the product of collaboration between the Maldives Monetary Authority, the Reserve Bank of India and NPCI International Payments Limited, under an agreement executed between NIPL and the MMA in July 2025, and went operational after an accelerated ten-day implementation covering testing, certification and onboarding. It has begun with two Maldivian banks, Bank of Maldives Plc and Maldives Islamic Bank Plc, and covers person-to-person transfers, with QR-based merchant payments planned in later phases. It is the latest step in India's effort to internationalise UPI across its neighbourhood and beyond.

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recallTests whether you read the article and retained key facts.
1Q
applicationTests whether you can apply the concept to a new scenario.
1Q
analysisTests whether you can reason across multiple related facts.
1Q

Sample questions — answers revealed after test

INTERNATIONAL RELATIONSRecallEasy

Q1. NPCI International Payments Limited (NIPL) is best described as:

AA regulator under the Ministry of Finance overseeing foreign payments
BThe international arm of the National Payments Corporation of India, set up in 2020 to take UPI and RuPay to overseas markets
CA subsidiary of the Reserve Bank of India managing foreign exchange reserves
DA multilateral institution jointly owned by South Asian central banks
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INTERNATIONAL RELATIONSApplicationMedium

Q2. Why have conventional cross-border retail remittances been slow and expensive?

ABecause real-time currency conversion is technically impossible
BBecause they route through chains of correspondent banks, each adding compliance screening, cut-off times and fees
CBecause central banks prohibit retail transfers below a threshold
DBecause international transfers require physical movement of currency
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INTERNATIONAL RELATIONSAnalysisHard

Q3. Consider the following statements about India's UPI internationalisation: 1. The Favara-UPI corridor links UPI with the Maldives' own national payment rail rather than replacing it. 2. The NIPL–Maldives Monetary Authority agreement was executed in July 2025, roughly a year before the corridor went live in July 2026. 3. The year-long gap indicates that technical integration, rather than regulatory alignment, dominated the timeline. Which of the statements given above are correct?

A1 and 2 only
B1 only
C2 and 3 only
D1, 2 and 3
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