A huge step has been taken towards establishing the digital economy of the Maldives, President Mohamed Muizzu has announced plans to introduce India’s Unified Payments Interface (UPI) system across the island nation.  The Cabinet has sanctioned the proposal after considering a report adopted by the Minister of Economic Development and Trade. 

The initiative comes on the heels of President Muizzu’s state visit to India earlier this month, where India committed to sharing its expertise in digital and financial services, including developing a Digital Public Infrastructure (DPI). The launch of UPI and a unique digital identity framework were central to these discussions, underscoring the close cooperation between the two nations.

 

How will UPI benefit the Maldivian economy?

 

The UPI scheme promises to benefit the financial scenario in Maldives in numerous ways. As reported in a release from the President's office, some of its key benefits include increased financial inclusion, increased speed and efficiency in financial transactions, and enhanced digital infrastructure.

President Muizzu resolved to establish a consortium of banks, telecom companies, state-owned entities, and fintech firms operating within the Maldives to ensure the success of the integration. To act in this role, TradeNet Maldives Corporation Limited, an agency with a proven track record, has been appointed as the leading agency in the consortium.

Additionally, an interagency coordination team will be formed, consisting of representatives from the Ministry of Finance, the Ministry of Homeland Security and Technology, and the Maldives Monetary Authority. This team will oversee the Ministry of Economic Development and Trade’s efforts to implement the UPI system.

 

Digital ties with India

 

India has been playing an important role in helping the government of Maldives upgrade its digital infrastructure. On the same visit by President Muizzu, India introduced the RuPay card in the Maldives. It will now make life easy for an Indian tourist in making payments, and on the other hand, help a Maldivian citizen to easily carry out transactions in India. This will be a new phase of enhancing digital and financial cooperation between the two nations, which will help in more connectivity and economic growth.

 

Maldivian president Mohamed Muizzu's India visit

 

Maldivian President Mohamed Muizzu visited India from October 6-10 for talks with Prime Minister Narendra Modi, in what the external affairs ministry described as a move to boost bilateral cooperation and ties. The visit, designated as a state visit, reflected New Delhi’s intent to reset relations after a strained period, according to sources familiar with the situation who spoke on condition of anonymity. This marked Muizzu’s first bilateral trip to India, although he had previously visited New Delhi in June to attend Modi’s swearing-in ceremony alongside leaders from six other regional countries.

Muizzu, who became president in November 2023 after leading an ‘India Out’ campaign, had initially taken measures to reduce the Maldives' reliance on India, including calling for the removal of around 85 Indian military personnel stationed in the archipelago to operate three aircraft. These actions led to a further deterioration of bilateral relations by the end of last year.

However, during the last few months, reports of a thaw began to emerge, as the Maldivian foreign minister Moosa Zameer traveled to India in May, followed shortly by the Indian external affairs minister S. Jaishankar's visit to the Maldives in August. In September, India also helped the Maldives avoid the risk of defaulting on Islamic bond payments by extending its subscription to Maldivian government treasury bills worth $50 million for another year.