India and Malaysia have agreed to collaborate on linking their domestic payment systems to enable faster and more affordable cross-border transactions, marking a significant step in deepening digital and financial ties between the two countries.
The proposed linkage will be developed through cooperation between NPCI International, the international arm of the National Payments Corporation of India, and Malaysia’s Payments Network Malaysia (PayNet). The initiative is expected to support retail payments and remittances, benefiting individuals and businesses in both markets.
Announcement During Prime Ministerial Visit
The decision was announced following Prime Minister Narendra Modi’s visit to Malaysia on February 7–8, during which he held discussions with Malaysian Prime Minister Anwar Ibrahim. According to the joint statement, the payment system linkage is aimed at simplifying transactions for tourists, students, small businesses and individuals sending money across borders.
Malaysia–India Digital Council Formed
Alongside the payments initiative, the two governments announced the creation of the Malaysia–India Digital Council. The council will act as a collaborative platform to advance cooperation across areas such as fintech, e-governance, cybersecurity, artificial intelligence and digital public infrastructure.
The body is expected to bring together representatives from government agencies, industry bodies and academic institutions from both countries, with a focus on coordinating projects and facilitating policy dialogue in the digital domain.
Push for Local Currency Settlement
India and Malaysia also encouraged greater use of local currencies for bilateral trade, allowing transactions to be invoiced and settled in the Indian rupee and the Malaysian ringgit. This builds on existing cooperation between the Reserve Bank of India and Bank Negara Malaysia to reduce reliance on third-country currencies.
The joint statement further highlighted the role of enhanced air and maritime connectivity in strengthening trade, tourism and investment flows between the two economies.
Broader Economic and Strategic Cooperation
Beyond digital payments, the two sides discussed collaboration in strategic sectors such as semiconductors and advanced manufacturing, identifying the chip industry as a priority area for deeper engagement across technology, supply chains and skill development.
Energy cooperation also featured prominently, with Malaysian companies PETRONAS and Gentari noted for their involvement in India’s renewable energy and green hydrogen initiatives. Food security was another area of focus, with Malaysia reiterating its role as a key supplier of sustainably produced palm oil.
Summary
India and Malaysia have agreed to link their domestic payment systems through NPCI International and PayNet to lower cross-border transaction costs for retail payments and remittances. The partnership, announced during Prime Minister Modi’s visit to Malaysia, also includes the formation of a Malaysia–India Digital Council, a push for local currency settlement in trade, and expanded cooperation in sectors such as semiconductors, energy and food security.
This article is intended solely for educational and informational purposes. The securities or companies mentioned are provided as examples and should not be considered as recommendations. Nothing contained herein constitutes personal financial advice or investment recommendations. Readers are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.
Investments in securities markets are subject to market risks. Please read all related documents carefully before investing.