By Raju Vernekar
Mumbai, July 16:
The Reserve Bank of India (RBI) and the Central Bank of UAE (CBUAE) signed two MoUs in Abu Dhabi to establish a framework to promote the use of the Indian rupee (INR) and the UAE Dirham (AED) for cross-border transactions on Saturday.
The MoUs cove all current account transactions and permitted capital account transactions. The creation of Local Currency Settlement System (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, a statement issued by RBI Chief General Manager Yogesh Dayal read.
This arrangement is expected to promote investments and remittances between the two countries. Besides. it would optimise transaction costs and settlement time for transactions, including for remittances from Indians residing in UAE.
Under the MOU on “Payments and Messaging Systems”, the RBI and CBUAE have agreed to cooperate on linking their Fast Payment Systems (FPSs) – Unified Payments Interface (UPI) of India with Instant Payment Platform (IPP) of UAE. Also to link the respective Card Switches (RuPay switch and UAESWITCH) and to explore the linking of payments messaging systems- Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE is part of the agreement.
The Unified Payments Interface (UPI) and Internet Printing Protocol (IPP) linkage will enable the users in either country to make fast and cost-effective cross-border funds transfers. Further 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, the RBI statement added.
The MoUs were signed by the RBI Governor Shaktikanta Das and the Governor of the Central Bank of UAE Khaled Mohamed Balama. The MoUs were exchanged between the two Governors, in the presence of Prime Minister Narendra Modi and President of the UAE Sheikh Mohamed Bin Zayed Al Nahyan.