On July 15, Reserve Bank of India and Central Bank of the United Arab Emirates (UAE) signed two MoUs for the use of local currencies for cross-border transactions and cooperation for interlinking their payment and messaging systems.
Two Memorandum of Understandings (MoUs) were exchanged in the presence of Prime Minister Narendra Modi and UAE President Mohammed bin Zayed al Nahyan in Abu Dhabi. The agreements aimed at facilitating seamless cross border transactions and payments, and fostering greater economic cooperation between India and United Arab Emirates (UAE).
As per the RBI statement, “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 cooperation for interlinking their payment and messaging systems”.
Prime Minister Narendra Modi said, “This is a 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 the Governor of the Reserve Bank of India, Shaktikanta Das and the Governor of the Central Bank of UAE, Khaled Mohamed Balama.
The MoUs were exchanged between the two Governors, in the august presence of the Prime Minister of India, 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.
The MoU also covers all current account transactions and permitted capital account transactions. Creation of the LCSS would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn would enable the development of an INR-AED foreign exchange market.
“This arrangement would also promote investments and remittances between the two countries. Use of local currencies would optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in UAE,” the release added.
Under the MOU on ‘Payments and Messaging Systems’, the two central banks agreed to cooperate on linking their Fast Payment Systems (FPSs) – Unified Payments Interface (UPI) of India with Instant Payment Platform (IPP) of UAE; linking the respective Card Switches (RuPay switch and UAESWITCH); and exploring the linking of payments messaging systems i.e., Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.
The UPI-IPP linkage will enable the users in either country to make fast, convenient, safe, and cost-effective cross-border funds transfers. The linking of Card Switches will facilitate mutual acceptance of domestic cards and processing of card transactions. The linkage of messaging systems is aimed to facilitate bilateral financial messaging between the two countries.
Earlier on July 15, Prime Minister Narendra Modi received a dazzling welcome in United Arab Emirates (UAE) as the iconic Buri Khalifa was lit up with the colours of the Indian nation flag. As a part of the light-and-sound show at the Burj on July 14, setting the stage for PM Modi’s arrival to the Gulf nation on an official visit, the skyscraper also showcased his picture, followed by a text that read, “Welcome Honorable Prime Minister Narendra Modi.”
Upon arrival, the Prime Minister received a ceremonial welcome at the airport, following which he met the Crown Prince of Abu Dhabi, Sheikh Khaled bin Mohammed bin Zayed Al Nahyan, in the United Arab Emirates (UAE).
Expressing his gratitude for the warm welcome to the Gulf nation, PM Modi took to Twitter to post, “Grateful to Crown Prince HH Sheikh Khaled bin Mohamed bin Zayed Al Nahyan for welcoming me at the airport today.”
Just hours before Prime Minister Narendra Modi landed in Abu Dhabi, the United Arab Emirates (UAE) said that its economic partnership with India “is a significant milestone in the history of both nations”.
The UAE’s Minister of State for Foreign Trade, Dr Thani bin Ahmed Al Zeyoudi, said in an interview that the UAE-India non-oil trade is expected to reach USD 100 billion a year by 2030.
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