Mumbai, Mar 17 (PTI) Reserve Bank on Monday said India's bilateral trade transactions with Maldives may also be settled in INR and/or MVR in addition to the ACU mechanism.

Asian Clearing Union (ACU) is a payment arrangement whereby the participants settle payments for intra-regional transactions among the participating central banks on a net multilateral basis.

The participants include central banks and the monetary authorities of Bangladesh, Belarus, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, and Sri Lanka.

A Memorandum of Understanding (MoU) has been signed between RBI and Maldives Monetary Authority in November 2024 for establishing a framework to promote the use of local currencies -- Indian Rupee (INR) and Maldivian Rufiyaa (MVR) for bilateral transactions.

"In the wake of signing of Memorandum of Understanding (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 said in a circular.

The RBI further said the instructions shall come into force with immediate effect. PTI NKD HVA

Local currency settlement allowed for bilateral trade with Maldives alongside ACU mechanism, effective immediately from now. The central bank has authorised local currency settlement for bilateral trade with the Maldives, allowing transactions to be settled in INR and/or MVR in addition to the Asian Clearing Union mechanism pursuant to a Memorandum of Understanding; these instructions take effect immediately and provide an additional payment option alongside ACU multilateral netting.