Mumbai, Reserve Bank on Monday said India’s bilateral trade transactions with Maldives may also be settled in INR and/or MVR in addition to the ACU mechanism. Asian Clearing Union (ACU) is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.
In a significant move to enhance bilateral trade, the Reserve Bank of India (RBI) has announced that trade transactions between India and the Maldives can now be settled in local currencies—Indian Rupees (INR) and Maldivian Rufiyaa (MVR)—in addition to the existing Asian Clearing Union (ACU) mechanism.
This development follows the signing of a Memorandum of Understanding (MoU) between the RBI and the Maldives Monetary Authority in November 2024, aiming to promote the use of local currencies for bilateral transactions.
The ACU is a payment arrangement that facilitates the settlement of intra-regional transactions among participating central banks on a net multilateral basis. Members include Bangladesh, Belarus, Bhutan, India, Iran, the Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.
By allowing trade settlements in INR and MVR, both nations aim to simplify transactions, reduce reliance on third-party currencies, and strengthen economic ties. This initiative is expected to provide greater flexibility for businesses in both countries, potentially simplifying trade processes and reducing dependency on third-party currencies.
The RBI has confirmed that this new trade settlement mechanism is effective immediately.
