Abu Dhabi: The Central Bank of the UAE (CBUAE) and the Reserve Bank of India (RBI) have inked two Memoranda of Understanding (MoUs) in the presence of President Sheikh Mohamed bin Zayed Al Nahyan and Mr. Narendra Modi, Prime Minister of India. The MoU’s objective is to promote rapid development in trade relations between the two countries.
The memoranda were signed by the Governor of CBUAE, Mr. Khaled Mohamed Balama, and the Governor of RBI, Mr. Shaktikanta Das. The CBUAE and RBI are planning to work together to develop a framework that advances the use of their national currencies, the UAE dirham and the Indian rupee.
As per the agreement set between importers and exporters, the first MoU explains a structure including various components and measures to enable the settlement of trade transactions in the two national currencies. It also defines the types of eligible transactions, allows the opening and use of correspondent accounts for the benefit of financial institutions in both countries, encourages direct exchange rates between the two national currencies, and offers options for liquidity management in accordance with the laws and regulations of the two countries.
Under this agreement, the two central banks will collaborate to advance the use of their national currencies by helping the gradual implementation of the framework, exchanging relevant information, and regularly evaluating the framework. The second MoU indent facilitates participants’ access to the services of IPPs and local payment card schemes in the UAE and India.
This will be achieved through the direct integration of these systems, ensuring compliance with regulatory requirements in both countries. The agreement also explores the possibility of leveraging both parties’ expertise in developing financial messaging systems and exploring potential linkages between similar systems in both countries, as per the statement.
Mr. Khaled Mohamed Balama, Governor of CBUAE, stated that, “Given the rapid advances in technology, innovation, and digital payments, these agreements reflect the CBUAE and RBI’s ambitions to enhance collaboration, share expertise, and leverage digital advances to process and settle cross-border payments more seamlessly and efficiently. This will enable consumers to easily access payment services available in both countries, serving our mutual interests, and support in strengthening the robust bilateral relations and economic partnership between the two countries in line with the directives of our wise leadership.”
“The two Memoranda of Understanding are of great significance as they provide a solid foundation for enhancing cooperation across the financial sector and supporting further trade and investment between the two countries. We look forward to working closely with our partners in India to improve cross-border payments and drive innovation in the financial technology space,” the Governor further added.