New Delhi: India and the UAE on Saturday signed an MoU to create a framework for the use of their respective local currencies for bilateral transactions. The two countries also agreed on India’s Unified Payments Interface (UPI) with UAE Linkage’s Instant Payment Platform (IIP). This will enable users from any country to make fast, convenient, secure and cost-effective cross-border fund transfers. A Memorandum of Understanding (MoU) was signed between India and the UAE in the presence of UAE President Mohammad Bin Zayed Al Nahyan and PM Narendra Modi.
The agreement was signed by Reserve Bank of India (RBI) Governor Shaktikanta Das and Central Bank of UAE (CBUAE) Governor Khalid Mohammad Balama. After India and France agreed to start using the Unified Payments Interface (UPI), the UAE also agreed to use it. RBI and CBUAE agreed to link payment messaging system.
The Central Bank of both the countries agreed on this issue
- Connecting UAE’s Instant Payment Platform (IIP) with India’s Unified Payments Interface (UPI) for Fast Payment System (FPS)
- Linking of Rupe Switch and UAE Switch
- Finding ways to link India’s payment messaging system i.e. Structured Financial Messaging System (SFMS) with the messaging system in UAE
The Reserve Bank said in a statement that the UPI-IPP linkage will enable users from any country to make fast, convenient, secure and cost-effective cross-border fund transfers. Linking card switches will facilitate mutual acceptance of domestic cards and simplify the processing of card transactions. The purpose of linking the messaging system is to facilitate bilateral financial communication between the two countries.
It was also agreed to establish a framework for the use of local currency for transactions between India and the UAE. It aims to establish a settlement system through local currency to promote the use of INR (Indian Rupee) and AED (UAE Dirham). In April 2022, NIPL announced that BHIM UPI has gone live on Mashreq Bank’s payments subsidiary NEOPAY’s terminals across the UAE. It aims to empower millions of Indians traveling to the UAE to make secure and convenient payments using BHIM UPI.