Abu Dhabi, UAE : The Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) have taken a significant step towards strengthening financial ties between the two nations. Today, in Abu Dhabi, two Memoranda of Understanding (MoUs) were signed, aiming to promote the use of local currencies and enhance cooperation in payment and messaging systems.
The MoUs were signed by Shri Shaktikanta Das, Governor of the Reserve Bank of India, and H.E. Khaled Mohamed Balama, Governor of the Central Bank of UAE. The signing ceremony took place in the presence of the Honourable Prime Minister of India, Shri Narendra Modi, and His Highness Sheikh Mohamed Bin Zayed Al Nahyan, President of the UAE.
The first MoU focuses on establishing a framework to promote the use of the Indian rupee (INR) and the UAE Dirham (AED) for cross-border transactions. Its objective is to create a Local Currency Settlement System (LCSS) that facilitates invoicing and payments in domestic currencies. By enabling exporters and importers to transact in their respective local currencies, the LCSS aims to develop an INR-AED foreign exchange market. This arrangement will also enhance investments and remittances between India and the UAE, while optimizing transaction costs and settlement time.
The second MoU, titled "Payments and Messaging Systems," aims to enhance cooperation between the two central banks in the areas of fast payment systems, card switches, and messaging systems. Specifically, the MoU seeks to link India's Unified Payments Interface (UPI) with the UAE's Instant Payment Platform (IPP), facilitating fast and secure cross-border fund transfers. The linkage of the respective card switches (RuPay and UAESWITCH) will enable the acceptance and processing of domestic cards from both countries. Additionally, the MoU explores the integration of messaging systems, facilitating bilateral financial messaging between India and the UAE.
These MoUs are expected to foster seamless cross-border transactions, promote economic cooperation, and strengthen the financial relationship between India and the UAE. By promoting the use of local currencies and improving payment and messaging systems, both nations aim to enhance trade, investments, and remittances while facilitating greater convenience, efficiency, and cost-effectiveness in cross-border transactions.
The agreements reflect the commitment of the RBI and CBUAE to strengthen bilateral ties and harness the potential of financial innovation. With these initiatives in place, businesses and individuals can look forward to smoother and more seamless financial transactions between India and the UAE, further deepening the economic cooperation between the two nations.
