RBI Signs MoU with Maldives for INR-MVR Cross-Border Payments

byPriyanka JuyalNovember 22, 2024
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Synopsis: 
  • RBI and MMA signed an MoU to allow cross-border transactions in INR and MVR.
  • The framework supports current and approved capital account transactions.
  • Traders can now settle payments directly in local currencies, reducing dependency on the US Dollar.
  • The initiative strengthens economic cooperation between India and Maldives.

In a major step towards strengthening economic and financial ties, the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) signed a Memorandum of Understanding (MoU) on Thursday in Mumbai. The agreement, signed by RBI Governor Shaktikanta Das and MMA Governor Ahmed Munawar, aims to establish a framework for using local currencies—the Indian Rupee (INR) and Maldivian Rufiyaa (MVR)—in cross-border transactions.

This move seeks to simplify trade settlements, reduce transaction costs, and enhance economic cooperation between the two nations.

Key Highlights of the MoU:

Benefits of the Local Currency Framework

  1. Optimised Trade Costs: Direct settlement in local currencies eliminates the need for third-party currencies like the US Dollar, cutting down on transaction costs.
  2. Improved Settlement Times: Faster processing ensures quicker payment cycles.
  3. Strengthened Bilateral Relations: The initiative deepens financial integration and economic cooperation between India and Maldives.
  4. Enhanced Trade Potential: Encouraging the use of INR and MVR promotes bilateral trade by simplifying payment systems.

The RBI highlighted that this collaboration represents a key milestone in bilateral cooperation, fostering stronger economic ties between the two nations.

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