The Central banks of India and UAE on Saturday inked agreements in Abu Dhabi to set up a framework for cross-border transactions in local currencies and interlinking of payment and messaging systems
India has been promoting cross-border transactions in local currencies to reduce dependence on the US dollar.
The objective is to establish a Local Currency Settlement System (LCSS) that encourages the use of these currencies for transactions between the two countries.
The MoU encompasses all current account transactions as well as authorized capital account transactions. Thus, providing a comprehensive coverage of financial exchanges between India and the UAE.
The utilization of local currencies would bring about significant benefits. Such as optimizing transaction costs and reducing settlement time for various transactions, including remittances from Indian individuals residing in the UAE.
By eliminating the need for currency conversions, this initiative aims to streamline the financial processes. Thus, making them more efficient and cost-effective for both individuals and businesses involved in cross-border transactions between India and the UAE