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ACU Settlement Now in Both Dollar and Euro

Current · Source: Reserve Bank of India · RBI/2008-09/332 · issued 26 Dec 2008 · ~1 min read
Quick answerFrom Jan 1, 2009, ACU participants can settle in ACU Dollar or ACU Euro. AD Category-I banks may open accounts in both currencies with correspondent banks in participating countries. All eligible payments must go through these accounts.
The rule, in the simplest words
How it plays out — a real example

A forex & trade-finance officer in Indore, Priya, handles a payment from a buyer in Bangladesh for gold jewelry. Before January 1, 2009, she could only settle in ACU Dollar. Now, she can choose ACU Euro if the buyer prefers, reducing exchange costs. She opens a new ACU Euro account with a bank in Bangladesh and settles the payment through it, making the transaction smoother for both sides.

What changed

Previously, ACU settlements were only in ACU Dollar. Effective January 1, 2009, participants have the option to settle in ACU Euro as well. The Asian Monetary Unit is now denominated as both 'ACU Dollar' and 'ACU Euro', equivalent to one US Dollar and one Euro respectively.

What it means for you

Banks now have flexibility to choose settlement currency, reducing exchange risk and transaction costs for euro-denominated trade within the ACU. This aligns with global trade practices and may boost ACU usage. Banks must update their systems and correspondent banking arrangements to handle dual-currency settlements.

What you must do

Who it affects

AD Category-I banks, Importers and exporters using ACU mechanism, Correspondent banks in ACU member countries

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

What currencies can we now use for ACU settlements?

From January 1, 2009, you can settle in either ACU Dollar or ACU Euro. The ACU Dollar equals one US Dollar, and the ACU Euro equals one Euro.

Do we need separate accounts for each currency?

Yes, AD Category-I banks are allowed to open and maintain both ACU Dollar and ACU Euro accounts with correspondent banks in other participating countries.

Are there any regulatory changes we should expect?

Yes, amendments to FEMA (Manner of Receipt and Payment) Regulations, 2000 and the ACU Memorandum are being issued separately. Stay tuned for those updates.

📜 Read the original circular — full text as issued by RBI
RBI/2008-09/332 A. P. (DIR Series) Circular No. 43 December 26, 2008 To, All Authorised Dealer Category - I Banks Madam / Sir, Settlement system under ACU Mechanism Attention of Authorised Dealer Category - I (AD Category - I) banks is invited to Article IV (b) and (c) of the General Provisions of Agreement establishing the Asian Clearing Union for channelling transactions through the Asian Clearing Union (ACU) in terms of which, the Asian Monetary Unit is denominated as "ACU Dollar" and Regulations 3 and 5 of Notification No. FEMA 14/2000-RB dated May 3, 2000 [Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000], as amended from time to time. 2. In order to facilitate transactions / settlements, effective January 01, 2009, participants in the Asian Clearing Union will have the option to settle their transactions either in ACU Dollar or in ACU Euro. Accordingly, the Asian Monetary Unit (AMU) shall be denominated as 'ACU Dollar' and 'ACU Euro' which shall be equivalent in value to one US Dollar and one Euro, respectively. 3. Further, AD Category – I banks are allowed to open and maintain ACU Dollar and ACU Euro accounts with their correspondent banks in other participating countries. All eligible payments are required to be settled by the concerned banks through these accounts. 4. Necessary amendments to the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2000 and Memorandum of Procedure for Channelling Transactions through Asian Clearing Union (ACU) [Memorandum ACM] are being issued separately. 5. AD Category – I banks may bring the contents of this circular to the notice of their constituents concerned. 6. The directions contained in this circular has been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and is without prejudice to permissions / approvals, if any, required under any other law. Yours faithfully, (D. Mishra) Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2008-09/332 · issued 26 Dec 2008. The plain-English explanation above is BankPulse’s own independent summary.
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Who does what — compliance checklist
⚙️ Operations
  • Inform constituents about the new settlement options.
📜 Compliance
  • Open and maintain ACU Dollar and ACU Euro accounts with correspondent banks in ACU member countries.
  • Ensure all eligible payments are settled through these designated accounts.
  • Prepare for separate amendments to FEMA regulations and the ACU Memorandum.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template

Example: if you are a Compliance officer at a bank this circular applies to (AD Category-I banks, Importers and exporters using ACU mechanism, Correspondent banks in ACU member countries), your first concrete step on “ACU Settlement Now in Both Dollar and Euro” is: “Open and maintain ACU Dollar and ACU Euro accounts with correspondent banks in ACU member countries.” (RBI issued this 26 Dec 2008).

  1. Circular: RBI/2008-09/332 -- ACU Settlement Now in Both Dollar and Euro
  2. Issued: 26 Dec 2008
  3. Action required: Open and maintain ACU Dollar and ACU Euro accounts with correspondent banks in ACU member countries.
  4. Action required: Ensure all eligible payments are settled through these designated accounts.
  5. Action required: Inform constituents about the new settlement options.
  6. Action required: Prepare for separate amendments to FEMA regulations and the ACU Memorandum.
  7. Owner: ____________ Target date: ____________
  8. Board/committee approval needed? Y / N
  9. Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.

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Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=4718&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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