RBI permits trade with Maldives in local currencies

India’s bilateral trade transactions with Maldives may also be settled in INR and MVR in addition to the ACU mechanism, the Reserve Bank of India said on Monday.

Among the participating central banks on a net multilateral basis, the Asian Clearing Union (ACU) is a payment arrangement whereby the participants settle payments for intra-regional transactions. The participants include central banks and the monetary authorities of Bangladesh, Belarus, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.

For establishing a framework to promote the use of local currencies — Indian rupee (INR) and Maldivian rufiyaa (MVR) — for bilateral transactions, an MoU was signed between the RBI and the Maldives Monetary Authority in November 2024.

In a statement issued on Monday, the RBI said, “In the wake of the MoU, it has been decided that India’s bilateral trade transactions with Maldives may also be settled in INR and/ or MVR in addition to the ACU mechanism, as hitherto.”

The RBI added that the instructions should come into force with immediate effect.