Abu Dhabi: In a significant move to enhance economic cooperation, the Reserve Bank of India and the Central Bank of the United Arab Emirates (UAE) signed two Memorandums of Understanding (MoUs) on Saturday. The MoUs were exchanged during a ceremony attended by Indian Prime Minister Narendra Modi and UAE President Mohammed bin Zayed Al Nahyan in Abu Dhabi.
The agreements focus on promoting the use of local currencies for cross-border transactions and establishing cooperation for interlinking payment and messaging systems between the two countries. These initiatives aim to streamline cross-border transactions and payments, while fostering greater economic collaboration between India and the UAE.
“The Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) signed two MoUs for establishing a framework to promote the use of local currencies-the Indian rupee (INR) and the UAE Dirham (AED)—for cross-border transactions; and cooperations for interlinking their payment and messaging systems,” RBI official release said.
Prime Minister Narendra Modi emphasised the significance of this cooperation, stating, “This is very important aspect of India-UAE cooperation. It paves the way for enhanced economic collaboration and will make international financial interactions simpler.”
The MoUs were signed by Shaktikanta Das, the Governor of the Reserve Bank of India, and Khaled Mohamed Balama, the Governor of the Central Bank of the UAE. The exchange took place in the presence of Prime Minister Narendra Modi and Sheikh Mohamed bin Zayed Al Nahyan, President of the UAE.
“The MoU on establishing a framework for the use of local currencies for transactions between India and UAE, aims to put in place a Local Currency Settlement System (LCSS) to promote the use of INR and AED bilaterally,” it said.
Additionally, the linkage between the Unified Payments Interface (UPI) and the Instant Payment Platform (IPP) will enable users in both countries to conduct fast, convenient, secure, and cost-effective cross-border fund transfers. The integration of Card Switches, such as RuPay Switch and UAESWITCH, will facilitate the mutual acceptance of domestic cards and the processing of card transactions. The messaging system linkage aims to facilitate bilateral financial messaging between India and the UAE.
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