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Informist, Tuesday, Mar. 18, 2025

--RBI, Bk of Mauritius in MoU to push local currency use for bilateral deals

MUMBAI – The Reserve Bank of India and Bank of Mauritius have signed a memorandum of understanding to promote the use of the Indian rupee and the Mauritian rupee for cross-border transactions, the RBI said in a release on Tuesday. "The MoU aims to promote the use of INR (rupee) and MUR (Mauritian rupee) in bilateral trade. The MoU covers all current account transactions and permissible capital account transactions as agreed upon by both the countries," the RBI said in the release.

Along with optimising the cost and settlement time for transactions, the new framework will allow exporters and importers to invoice and pay in their local currencies, enabling the development of a market for the rupee and the Mauritian rupee. Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Mauritius as well as deepening financial integration and strengthening historical, cultural, and economic relations between the two countries, the release said.

The memorandum will result in the implementation of the INR-MUR Local Currency Settlement System to reduce dependency on hard currencies for cross-border transactions. The system will help Mauritius and India further develop their respective exchange markets and facilitate bilateral trade and settlement, direct investment, remittances, financial market development, economic growth and stability.

The memorandum also provides for cooperation to set up an Indian rupee clearing centre in Mauritius, and the inclusion of the Indian unit as a settlement currency in the Mauritius Automated Clearing and Settlement System. As such, commercial banks would be able to hold an account in Indian rupees at the Bank of Mauritius for transactions in the currency.

The Indian rupee clearing centre will ultimately be extended to the Common Market for Eastern and Southern Africa's Regional Payment and Settlement System, for which Bank of Mauritius is the settlement bank. It is proposed that the Indian rupee be included as a settlement currency. This initiative will promote Mauritius as a jurisdiction for clearing and settlement in the Indian unit on the continent.

After the signing of the MoU, Bank of Mauritius Governor Rama Krishna Sithanen said, "The establishment of a framework for settlement in Mauritian and Indian currencies, and the creation of an INR Clearing Centre will undoubtedly benefit both Mauritius and India. This will bolster trade and investment between the two countries while mitigating volatility and other foreign currency risks."

In November, the RBI had signed a memorandum with the Maldives Monetary Authority to promote the use of local currencies after signing a similar document with Bank Indonesia in March last year.  End

Reported by Kabir Sharma

Edited by Ashish Shirke

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