RBI Enables Direct INR-MVR Trade Settlement Between India and Maldives
India and Maldives can now settle trade directly in INR and MVR, reducing reliance on third-party currencies
The Reserve Bank of India (RBI) has announced that trade between India and the Maldives can now be settled in Indian Rupees (INR) and Maldivian Rufiyaa (MVR). This decision follows a Memorandum of Understanding (MoU) signed between RBI and the Maldives Monetary Authority in November 2024. The new system allows traders to use INR or MVR instead of relying only on the Asian Clearing Union...
The Reserve Bank of India (RBI) has announced that trade between India and the Maldives can now be settled in Indian Rupees (INR) and Maldivian Rufiyaa (MVR).
This decision follows a Memorandum of Understanding (MoU) signed between RBI and the Maldives Monetary Authority in November 2024. The new system allows traders to use INR or MVR instead of relying only on the Asian Clearing Union (ACU) mechanism.
Key Details from the Notification:
Alternative to ACU Mechanism: Previously, trade transactions between India and the Maldives were primarily conducted through the Asian Clearing Union (ACU) mechanism, which often involved settlements in a third currency, such as the US dollar. With this new directive, businesses can now settle trade directly in INR and MVR, reducing dependency on third-party currencies.​
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Immediate Implementation: The RBI has instructed Authorised Dealer Category-I (AD Category-I) banks to implement this change immediately and to inform their clients about the new settlement options.​
Legal Framework: This directive is issued under Sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999, ensuring compliance with existing foreign exchange regulations.
India is one of the Maldives' largest trading partners. In 2023, India exported goods worth approximately $591 million to the Maldives, with major exports including granite ($58 million), packaged medicaments ($28.7 million), and raw iron bars ($24.2 million).
The Maldives exported goods valued at $74.9 million to India, with significant exports being planes, helicopters, and/or spacecraft ($57.8 million), scrap iron ($10.6 million), and scrap copper ($4.13 million).
To Read the full text of the Order CLICK HERE
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