WASHINGTON—Across South Asia, three governments are choosing the digital rails that will carry their identity systems, payments, and health records for decades to come. Nepal is deciding how to build the digital infrastructure for its national identification system. Bangladesh is rebuilding its payments backbone on open-source software, following the failure of an Indian-inspired platform. And Sri Lanka holds an Indian grant for its digital identity platform but is reconsidering moving forward with it. Their largest neighbor, India, is supplying the region’s best-known digital public infrastructure built at low cost—but the decisions that matter regionally now sit in Kathmandu, Dhaka, and Colombo.
Digital public infrastructure is not neutral pipework. It embeds decisions, such as who counts as a person, who authorizes a transaction, and who has access to what data. Countries make these decisions when they first adopt a system and find them hard to revisit later. A country can change its health minister, its ruling coalition, and its development partners far more easily than it can change the network that carries subsidy delivery, insurance enrollment, and clinical records for its citizens.
Public health shows what is at stake: To fund a health scheme, the state must know who is eligible. To pay a cash transfer, it needs to reach the beneficiary and not get diverted through middlemen. To track an outbreak, it needs records that follow the patient from clinic to clinic. And to act before a flood or heatwave, it must both find the people at risk and move money to them in time.
Since the choices being made now could shape South Asia for decades, it’s worth examining what each country is doing in more detail.
India
India’s experience shows what these choices produce. India has developed a national identity system called Aadhaar, which issues a unique twelve-digit number to each Indian and eligible foreign resident. On top of this identity layer, New Delhi has developed the Unified Payments Interface (UPI), a real-time digital payments system administered by the National Payments Corporation of India (NPCI). The Ayushman Bharat Digital Mission (ABDM), a digital health ecosystem that includes patients’ records, makes up a third component, which is currently under construction. These three systems are making the delivery of essential services possible at a scale governments once thought unworkable. But the day-to-day authentication and usage have also left their own errors on exclusion, data governance, and the limits of state visibility.
The advantage of the Indian model is economic. India built Aadhaar for roughly $1.2 billion and enrolled nearly 1.4 billion people—under a dollar a head. UPI charges no fee to merchants or consumers, and it now clears more than twenty-two billion transactions a month. Systems built for a low-income population at continental scale reach unit economics that Western vendors find it difficult to match. Many of India’s consumer sectors run on the same “sachet logic”—shrink the unit, not the quality—and the same holds for public systems.
India wants its systems to become the regional standard. The question is whether honest accounting of the model’s failures serves that goal better than continued promotion of its successes. So far, regional cooperation is more an opportunity than a reality.
Nepal
Nepal has adopted India’s Unified Payments Interface (UPI) for cross-border transfers through a tie-up between Fonepay, its largest payments network, and NPCI International. Merchant payments went live in March 2024, and person-to-person remittances followed in June 2026. But Nepal’s national identity effort has moved more slowly. The country is undertaking the Nepal Digital Transformation project, a government-wide data exchange, social registry, and digital locker for managing verifiable credentials and digital documents. The work sits under a $90 million Digital Transformation Project, financed by a $50 million World Bank credit approved in February 2026 and a $40 million Asian Development Bank loan approved in March.
In the coming months, Nepal will show whether cost or strategic hedging drives small-state decisions. What to watch: which stack the department selects—an Indian-derived system like MOSIP (Modular Open Source Identity Platform), a Chinese vendor package, or an open-source system built by the Nepali government; whether World Bank and Asian Development Bank procurement terms require open standards that keep the choice reversible; and whether remittance volume on the Fonepay-UPI corridor grows enough to pull the identity decision toward Indian rails.
Bangladesh
Unlike Nepal, Bangladesh is moving away from India’s model. Binimoy, Bangladesh’s UPI-inspired payments platform, launched in November 2022 and never gained much traction. The previous government built it for about $6 million, participation stayed voluntary, and the dominant mobile-money providers never connected. In 2025, Bangladesh’s central bank suspended it, citing irregularities and breach of contract.
Now, Dhaka is building its Interoperable Instant Payment System on Mojaloop, an open-source platform, with the intention of reducing its dependence on proprietary foreign technology. Bangladesh Bank announced the build in September 2025. The system aims to connect banks, mobile financial services such as bKash and Nagad—which still run in silos—and, eventually, microfinance institutions. The central bank treats cross-border remittances, about 6 percent of gross domestic product, as a leading use case for the platform, and therefore it is likely to prioritize building the system around remittances.
Success may come down to whether the central bank mandates participation, since the voluntary nature of Binimoy was a major factor in its failure. Also watch whether bKash and Nagad, which hold most of the country’s digital payment accounts, connect and route volume through the new system; and whether a cross-border remittance corridor—for example, with NPCI International—can bring Indian infrastructure back into a system that is aiming to reduce foreign dependence.
Sri Lanka
If Nepal is weighing whether to incorporate more elements of the Indian model, and Bangladesh is taking an approach that moves away from Indian systems, then Sri Lanka is somewhere in between. It is using an Indian grant of around $35 million to fund its Sri Lanka Unique Digital Identity project, which is built on the MOSIP platform that India developed. But vendors’ bids for the system came in at more than double the grant, and the government has since put the project under review. Alternatively, the government could reduce its scope. However, the bilateral agreement requires the main systems integrator to be an Indian firm, so Sri Lanka’s choices are limited, and this financing shortfall has pushed the target date for issuing the first digital IDs into 2027.
In Sri Lanka’s case, watch for whether New Delhi helps cover the funding gap or Colombo trims the scope. If Colombo trims its plans, then enrollment reach and access to grievance redress could suffer. Meanwhile, delays in decision-making may create more political constraints surrounding objections to foreign firms’ access to citizens’ data.
The regional cooperation gap
South Asia’s regional institutions have to catch up. Bilateral politics still constrain subregional cooperation, so the deepest integration underway—the alignment of identity and payment systems across borders—happens through procurement and vendor relationships, not negotiated frameworks. No regional forum lets Nepal, Sri Lanka, and Bangladesh compare notes on what they adopted from Indian systems, what they modified, and what failed.
Donors and multilateral development banks miss that opportunity, too. They finance digital public infrastructure country by country with no meaningful mechanism to pool lessons learned.