India and Israel have signed a significant agreement to link their Unified Payments Interface (UPI) payment systems, marking a milestone in digital payment cooperation between the two nations. This accord represents a strategic move to enhance cross-border financial connectivity and streamline digital transactions.

Strategic Digital Payment Partnership

The agreement between India and Israel focuses on integrating their respective digital payment infrastructures. India's UPI system, which has revolutionized domestic digital payments, will now be connected with Israel's payment framework, creating new opportunities for seamless financial transactions between the two countries.

Implications for Cross-Border Transactions

This linking of payment systems is expected to facilitate easier and more efficient financial exchanges between Indian and Israeli businesses and individuals. The integration could potentially reduce transaction costs and processing times for cross-border payments, benefiting trade and commerce between the nations.

Strengthening Bilateral Relations

The UPI linking accord demonstrates the growing technological cooperation between India and Israel. This agreement builds upon existing bilateral relationships and showcases both countries' commitment to leveraging digital innovation for economic advancement. The partnership reflects a shared vision of modernizing financial infrastructure through collaborative efforts.

Digital Payment Infrastructure Development

By connecting their payment systems, both nations are positioning themselves at the forefront of digital payment innovation. This initiative aligns with global trends toward digitalization of financial services and cross-border payment solutions, potentially serving as a model for similar international partnerships in the digital payments sector.

The government is actively working to expand India's homegrown Unified Payments Interface (UPI) to additional overseas markets, particularly targeting East Asian countries, financial services secretary M. Nagaraju announced at the Global Inclusive Finance India Summit in New Delhi. The digital payment system has demonstrated remarkable growth domestically and is now poised for broader international adoption.

Current UPI International Presence

UPI transactions are currently accepted across eight countries, establishing India's digital payment footprint in diverse global markets. The existing network spans multiple regions and economic zones.

Nagaraju emphasized that digital payments in India have grown significantly due to UPI adoption, with the interface now being prepared to facilitate payments in additional overseas markets. UPI transactions crossed 21 billion in December 2025, according to the finance ministry, driven by increased adoption of PM Jan Dhan Yojana accounts.

Stand Up India Scheme Expansion

As part of efforts to deepen financial inclusion initiatives, the government is expanding the scope of the Stand Up India scheme to provide larger loans to more beneficiaries, particularly focusing on Scheduled Castes (SC) and Scheduled Tribes (ST) communities. The scheme has demonstrated strong performance since its inception, with notable participation patterns across different demographic groups.

The Stand Up India scheme aims to promote entrepreneurship among women and SC and ST communities by facilitating bank loans for establishing greenfield enterprises across various sectors.

Financial Infrastructure Development

The National Payments Corporation of India (NPCI), which operates India's retail payments and settlement systems, runs the UPI interface. The financial services secretary highlighted that the department is working to provide fintech companies with access to global markets through trade deals, supporting the broader digitalization agenda.

Regarding banking infrastructure, Nagaraju noted that the government is ensuring banking touchpoints reach every corner of the country as part of its financial inclusion plan. Currently, 99.9% of villages are covered, with remaining gaps in difficult terrain areas such as parts of Arunachal Pradesh to be addressed through banking touchpoints within a five-kilometer radius.

Economic Impact and Future Outlook

Nagaraju emphasized that financial inclusion serves as a key driver for economic growth and poverty alleviation, creating a multiplier effect that benefits larger segments of the economy. The expansion of digital payment systems and enhanced access to credit facilities aligns with the government's broader economic development strategy.

Vivek Iyer, partner and financial services risk leader at Grant Thornton Bharat, commented on expectations for Budget 2026, stating that India requires a financial architecture capable of handling volatility while encouraging innovation. He suggested that the government's focus should shift from purely expanding credit access to improving the quality, resilience, and intelligence of the credit and savings ecosystem.