RBI, Bank of Mauritius sign MoU on use of local currencies for bilateral transactions

The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have signed an agreement to establish a framework promoting the use of the Indian Rupee (INR) and the Mauritian Rupee (MUR) for cross-border transactions.

The Memorandum of Understanding (MoU) was inked by RBI Governor Sanjay Malhotra and his Bank of Mauritius Governor Rama Krishna Sithanen G.C.S.K, the central bank said in a statement on Tuesday.

The MoU documents were exchanged in the presence of Prime Minister Narendra Modi and his Mauritian counterpart, Navinchandra Ramgoolam.

The agreement covers all current account transactions and permissible capital account transactions as mutually agreed upon by India and Mauritius.

Under the framework, exporters and importers will be able to invoice and settle payments in their respective domestic currencies, fostering the development of an INR-MUR market.

The use of local currencies is expected to reduce transaction costs and expedite settlement times, optimising cross-border trade processes.

"This collaboration marks a key milestone in strengthening bilateral cooperation between RBI and BOM,” the central bank said in a statement.

"Use of local currencies in bilateral transactions will eventually contribute to promoting trade between India and Mauritius as well as deepen financial integration and strengthen the historical, cultural, and economic relations between India and Mauritius."

The pact was one of several outcomes of Prime Minister Modi’s visit to Mauritius, which also saw the signing of agreements including a credit facility deal between the Mauritian government and the State Bank of India, and an MoU between India’s Ministry of Micro, Small and Medium Enterprises and Mauritius’ Ministry of Industry, SME and Cooperatives. Other key agreements included cooperation in governance, maritime information sharing, and financial crime prevention.

During the visit, Modi inaugurated the Atal Bihari Vajpayee Institute of Public Service and Innovation, a new health centre at Cap Malheureux, and 20 High Impact Community Development Projects (HICDP).

He also handed over a navigational chart of St Brandon Island, prepared by the Indian Navy, and announced India’s support for constructing a new Parliament Building in Mauritius, alongside Phase-II of the HICDP initiative.