RBI allows INR/MVR settlement for India-Maldives trade
Current · Source: Reserve Bank of India · RBI/2024-2025/125 · issued 17 Mar 2025 · ~1 min read
Quick answerRBI now permits India-Maldives bilateral trade to be settled in Indian Rupees (INR) or Maldivian Rufiyaa (MVR), in addition to the existing ACU mechanism. This follows a November 2024 MoU between RBI and Maldives Monetary Authority to promote local currency use.
The rule, in the simplest words
India and Maldives can now trade using Indian Rupees (INR) or Maldivian Rufiyaa (MVR) directly, without always using the old ACU (a special group for payments between some countries) system.
This new rule started on March 17, 2025, and works for all trade between the two countries.
Banks that handle foreign money (called Authorised Dealer banks) must update their systems and tell their customers, like importers and exporters, about this new way to pay.
All trades must still follow India's foreign exchange rules (FEMA) and any other laws.
How it plays out — a real example
A forex & trade-finance officer in Mumbai, Priya, gets a call from an exporter who sells spices to a buyer in Maldives. The exporter used to pay extra fees to route payments through the ACU system, but now Priya explains they can settle directly in Indian Rupees (INR) or Maldivian Rufiyaa (MVR), saving money and time. Priya updates her bank's system to handle these new payments and sends a circular to all her trade customers about the change.
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
❓ Common questions
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.
📜 Read the original circular — full text as issued by RBI
RBI/2024-2025/125
A.P. (DIR Series) Circular No. 22
March 17, 2025
To
All Category-I Authorised Dealer Banks
Madam/ Sir
Asian Clearing Union (ACU) Mechanism – Indo-Maldives trade
Attention of Authorised Dealer Category – I (AD Category-I) banks is invited to Subclause (a)(ii) of Clause (I) of Sub regulation 2 of Regulations 3 of Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 in terms of which trade transactions between ACU member countries are to be routed through the ACU mechanism or as per the directions issued by the Reserve Bank of India.
2. In the wake of signing of Memorandum of Understanding (MoU) between RBI and Maldives Monetary Authority in November 2024 for establishing a framework to promote the use of local currencies i.e., Indian Rupee (INR) and Maldivian Rufiyaa (MVR) for bilateral transactions, it has been decided that India’s bilateral trade transactions with Maldives may also be settled in INR and/or MVR in addition to the ACU mechanism, as hitherto.
3. The above instructions shall come into force with immediate effect. AD Category-I banks may bring the contents of this circular to the notice of their constituents concerned.
4. The directions contained in this circular have been issued under sections 10(4) and 11(1) of the Foreign Exchange Management Act (FEMA), 1999 (42 of 1999) and are without prejudice to permissions / approvals, if any, required under any other law.
Yours faithfully,
(N. Senthil Kumar)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2024-2025/125 · issued 17 Mar 2025. The plain-English explanation above is BankPulse’s own independent summary.
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.
📜 Compliance
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.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an Operations officer at a bank this circular applies to (Category-I Authorised Dealer banks handling India-Maldives trade, Indian importers and exporters trading with Maldives, Maldives counterparties and banks involved in bilateral trade), your first concrete step on “RBI allows INR/MVR settlement for India-Maldives trade” is: “Update internal systems and procedures to handle INR/MVR settlements for India-Maldives trade transactions.” (RBI issued this 17 Mar 2025).
Circular: RBI/2024-2025/125 -- RBI allows INR/MVR settlement for India-Maldives trade
Issued: 17 Mar 2025
Action required: Update internal systems and procedures to handle INR/MVR settlements for India-Maldives trade transactions.
Action required: Inform your constituents, including importers and exporters, about the new settlement option via circulars or advisories.
Action required: Ensure compliance with FEMA provisions and any other applicable laws when processing such transactions.
Action required: Monitor and report any issues or queries to RBI as needed.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
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.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 03 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=12792&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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