RBI and Bank of Mauritius Sign MoU to Facilitate Local Currency Transactions

The RBI and BOM have signed a MoU to promote the use of local currencies in cross-border transactions. This agreement allows payment in INR and MUR, encompassing both current and permissible capital account transactions. It aims to reduce costs, speed up settlements, and strengthen trade and financial relations between India and Mauritius.

The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have formalized an agreement to enhance cross-border trade by utilizing local currencies. Signed by RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen G.C.S.K., this Memorandum of Understanding (MoU) establishes a framework for conducting transactions in Indian Rupee (INR) and Mauritian Rupee (MUR).

This agreement encompasses all current account transactions and capital account transactions as mutually approved by both nations. It allows exporters and importers to invoice and settle payments in their respective currencies, thereby fostering the development of a dedicated INR-MUR market. The adoption of these local currencies aims to reduce transaction costs and expedite settlement times, enhancing cross-border trade efficiency.

The central bank emphasized that this collaboration represents a pivotal advancement in enhancing bilateral relations. The MoU not only seeks to bolster trade between India and Mauritius but also aims to deepen financial integration, and strengthen the long-standing historical and cultural connections between the two countries.

This initiative emerged during Prime Minister Narendra Modi’s visit to Mauritius, where various agreements were also reached, including a credit facility arrangement between the Mauritian government and the State Bank of India, and an MoU between India’s Ministry of Micro, Small and Medium Enterprises and Mauritius’ Ministry of Industry, SME and Cooperatives. Other collaborative efforts include maritime information sharing and financial crime prevention.

Further during the visit, Prime Minister Modi inaugurated several initiatives, including the Atal Bihari Vajpayee Institute of Public Service and Innovation, a new health centre at Cap Malheureux, and 20 High Impact Community Development Projects. He also presented a navigational chart for St Brandon Island, prepared by the Indian Navy, and pledged India’s support for constructing a new Parliament Building in Mauritius.

The establishment of the MoU between the Reserve Bank of India and the Bank of Mauritius signifies a progressive step toward fostering bilateral economic relations. By utilizing local currencies for transactions, this agreement is poised to enhance trade efficiency and financial integration, benefiting both nations and solidifying their historical ties.

Original Source: upstox.com