India & Dubai Signs 2 MoUs To Promote The Use Of INR & AED For Cross-Border Transaction

The Reserve Bank of India (RBI) and the Central Bank of UAE have signed 2 Memoranda of Understanding in the presence of Indian Prime Minister Narendra Modi and Dubai President Mohamed Bin Zayed. The MoUs have been signed to establish a Local Currency Settlement (LCS) system, aimed at promoting the use of INR and Dirham for cross-border transactions. The first MoU focuses on the settlement of all trade transactions, current account transactions, and permissible capital account transactions in the local currencies of Rupees or Dirham. The second MoU consists of 3 components. The first is the linkage of UPI with IPP (Instant Payment Platform), along with the settlement of domestic credit card transactions via a Direct Messaging System. Domestic credit cards can be used directly, eliminating the need for an international card network. The Direct Messaging System is established between India and Dubai, ensuring that neither of the countries is dependent on the SWIFT messaging system.