Maldives to accept rupee payments? What RBI-Maldives Monetary Authority agreement means | Biz News

The Reserve Bank of India said it had inked an agreement with the Maldives Monetary Authority to encourage the use of local currencies. Know which transactions are eligible.

India Maldives encourage local currency payments. (Photo credit: Rosemary Calvert/Moment Mobile/Getty Images)

Mumbai: The Reserve Bank of India has inked an agreement with the Maldives Monetary Authority for promoting local currencies in carrying out bilateral transactions, according to an official statement. As part of the MoU, the Indian rupee and the Maldivian Rufiyaa will be used to settle cross-border transactions. RBI governor Shaktikanta Das signed the agreement with MMA governor Ahmed Munawar.

RBI has been promoting rupee trade with trade partners in a bid to promote the INR as a key store of value. In 2022, the central bank introduced Vostro accounts in a bid to encourage rupee-based payments for Russian oil.

Transactions eligible for INR-MVR payment

Capital market transactions and current account transactions will be eligible for INR-MVR payments, according to the statement. Further, any financial and economic transactions that are agreed upon by the 2 sides will be eligible for such payments. Exporters and importers will be able to raise invoices and settle the same in their domestic currency going forward. This will promote INR-MVR pair trading in the foreign exchange market.

Reserve Bank of India and Maldives Monetary Authority Sign Memorandum of Understanding (MoU) to Promote Use of Local Currencies for Bilateral Transactionshttps://t.co/WaA0W1HwSN

— ReserveBankOfIndia (@RBI) November 21, 2024

Currently, each currency is indexed to the US dollar, which makes it time-consuming and more expensive when it comes to making real-time payments. INR-MVR currency trade will ultimately encourage bilateral trade between the two countries, the RBI said.

India’s rupee trade partners

India has inked agreements with 22 countries for rupee trade. Vostro accounts enable Inda to legitimise direct invoicing and bill payments in the rupee, instead of countries converting their currency to dollar terms. Here are the names that have already opened Vostro accounts for rupee trade:

The writer is a business and opinion journalist with over 8 years’ experience in print and digital journalism. He is focused on simplifying business concepts for readers and offering news that you can use. He also covers auto sector news for this publication.

Read More

Next Article