What changed
Previously, trade transactions between India and Maldives, both ACU member countries, had to be routed through the Asian Clearing Union (ACU) mechanism. Now, such bilateral trade can also be settled directly in INR and/or MVR, effective immediately from March 17, 2025.
What it means for you
Banks and traders now have more flexibility in settling India-Maldives trade, reducing reliance on the ACU mechanism and potentially lowering transaction costs. This move supports RBI's push for internationalisation of the rupee and strengthens bilateral economic ties by encouraging local currency usage.
What you must do
- Update internal systems and procedures to handle INR/MVR settlements for India-Maldives trade transactions.
- Inform your constituents, including importers and exporters, about the new settlement option via circulars or advisories.
- Ensure compliance with FEMA provisions and any other applicable laws when processing such transactions.
- Monitor and report any issues or queries to RBI as needed.
Who it affects
Category-I Authorised Dealer banks handling India-Maldives trade, Indian importers and exporters trading with Maldives, Maldives counterparties and banks involved in bilateral trade
Can we still use the ACU mechanism for India-Maldives trade?
Yes, the ACU mechanism remains available. The circular adds INR/MVR settlement as an additional option, not a replacement.
When does this change take effect?
The instructions are effective immediately from March 17, 2025, the date of the circular.