CBUAE and RBI to facilitate currency, payment transactions

The Central Bank of the UAE (CBUAE) and the Reserve Bank of India (RBI) signed two Memoranda of Understanding (MoUs), which aim to support the rapid growth of trade relations between the two countries on Saturday.

The MoUs were signed in the presence of President His Highness Sheikh Mohamed bin Zayed Al Nahyan and Shri Narendra Modi, Prime Minister of the Republic of India, and signed by Khaled Mohamed Balama, Governor of CBUAE, and Shri Shaktikanta Das, Governor of RBI.

The CBUAE and RBI will work together to develop a framework that promotes the use of the UAE dirham and the Indian rupee in cross-border transactions. The framework will also streamline payment services in both countries, through the linkage of their instant payment platforms (IPPs), local payment card systems, and financial messaging systems.

The first MoU defines a framework to facilitate the settlement of trade transactions in the two national currencies. It outlines the types of eligible transactions, allows the opening and use of correspondent accounts, promotes direct exchange rates between the two national currencies, and provides options for liquidity management in accordance with the laws and regulations of the two countries.

The two central banks will collaborate on promoting the use of their national currencies by gradually implementing the framework, exchanging relevant information, and periodically assessing the framework’s effectiveness for improvement.

With a framework to promote the use of both national currencies in commercial transactions, CBUAE and RBI aim to develop the foreign exchange market, facilitate bilateral trade, encourage direct investment, and facilitate financial transfers.

The second MoU focuses on directly integrating instant payment platforms and local payment card schemes in both countries.

It intends to consolidate cooperation between the two parties by linking their respective IPPs to make cross-border instant payments more efficient through UAESWITCH and RuPay Switch

This will also allow the acceptance of local cards in both countries for ATM cash withdrawals and direct point-of-sale purchases without relying on external payment networks.

The MoU also explores linking financial messaging systems between the two countries.

شهد صاحب السمو الشيخ محمد بن زايد آل نهيان، رئيس الدولة "حفظه الله"، ودولة ناريندرا مودي، رئيس وزراء جمهورية الهند اليوم، تبادل مذكرتي تفاهم ثنائية بين #مصرف_الإمارات_المركزي وبنك الاحتياطي الهندي، بهدف دعم النمو التجاري المتسارع بين البلدين، من خلال إرساء إطار تعزيز استخدام… pic.twitter.com/9ajk7JNtog

— Central Bank of the UAE (@centralbankuae) July 15, 2023