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Reserve Bank of India (RBI) and Central Bank of The UAE signs MoU to promote cooperation

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Recently, the Reserve Bank of India (RBI) and the Central Bank of The UAE signed MoUs to promote the framework for use of local currencies for cross-border transactions. Further, RBI and the Central Bank of the UAE also signed MoU for cooperation for interlinking their payment and messaging systems.

The MoU to promote framework for use of local currencies for cross-border transactions shall put in place a Local Currency Settlement System which will facilitate use of Indian Rupees and UAE Dirham between India and the UAE. The MoU shall cover all current account transactions and permitted capital account transactions and will allow exporters and importers to settle payment in local currency. The setup of the Local Currency Settlement System will reduce transaction costs, settlement time and reliance on US Dollar.

The MoU for cooperation for interlinking their payment and messaging systems will allow for linking of the Instant Payment Platform of the UAE with Unified Payments Interface (UPI) of India. The MoU will also facilitate linking of respective RuPay switch and UAESWITCH and allow mutual acceptance of domestic cards and processing of card transactions. Lastly, RBI and the Central Bank of UAE agreed to explore the linking of payments messaging systems i.e., Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.

In recent times, India has entered into similar MoUs with UK, France, Oman, Bhutan, Nepal and ASEAN countries.

Readers can access the press release regarding the same below.

Readers are also welcome to send their views to Regstreet Law Advisors at info@regstreetlaw.com.

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