The RBI and BOM have signed a Memorandum of Understanding to promote the use of local currencies for cross-border transactions, including invoicing and settling payments in INR and MUR. This move is expected to reduce costs and improve efficiency in trade, as stated by both banks. The agreement was part of broader collaborations established during PM Modi’s visit to Mauritius.
The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have established a Memorandum of Understanding (MoU) aimed at facilitating the use of local currencies, specifically the Indian Rupee (INR) and the Mauritian Rupee (MUR), for cross-border transactions. The agreement was signed by RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen G.C.S.K., with dignitaries such as Prime Minister Narendra Modi and Prime Minister of Mauritius Navinchandra Ramgoolam present during the exchange of documents.
The MoU encompasses all current account transactions and permissible capital account transactions as agreed by the two nations. This framework allows exporters and importers to invoice and settle payments using their domestic currencies, which is anticipated to contribute to the development of an INR-MUR market. The utilization of local currencies is expected to minimize transaction costs and enhance settlement times, optimizing the process of cross-border trade.
According to RBI, this collaboration is a significant milestone in cementing bilateral cooperation between the two banks. It is projected that the use of local currencies in bilateral transactions will promote trade between India and Mauritius, whilst also solidifying financial integration and strengthening the long-standing historical, cultural, and economic ties between the two countries.
The signing of the MoU was part of broader agreements reached during Prime Minister Modi’s visit to Mauritius, which also included a credit facility deal between the Mauritian government and the State Bank of India, along with an MoU between India’s Ministry of Micro, Small, and Medium Enterprises and Mauritius’ Ministry of Industry, SME, and Cooperatives. Additionally, important agreements regarding governance, maritime information sharing, and financial crime prevention were established.
During his visit, Prime Minister Modi inaugurated various projects, including the Atal Bihari Vajpayee Institute of Public Service and Innovation, a health center at Cap Malheureux, and 20 High Impact Community Development Projects (HICDP). He also presented a navigational chart of St Brandon Island, created by the Indian Navy, and pledged support for the construction of a new Parliament Building in Mauritius, alongside further development within the HICDP framework.
The signing of the MoU between the RBI and BOM marks a pivotal advancement in facilitating bilateral trade through the use of local currencies. The initiative aims to reduce transaction costs and improve efficiency, thereby enhancing economic integration between India and Mauritius. This cooperation not only reinforces financial ties but also enriches the historical and cultural relationships between the two nations, supporting broader collaborative efforts initiated during Prime Minister Modi’s recent visit.
Original Source: upstox.com
