The Reserve Bank of India has granted permission for trade transactions with Maldives to be settled in Maldivian currency.

On Monday, the Reserve Bank of India (RBI) revealed that in addition to the Asian Clearing Union (ACU) mechanism, bilateral trade transactions with Maldives can also be settled in Indian Rupees (INR) or Maldivian Rufiyaa (MVR).

ACU is a payment arrangement for intra-regional transactions among the participating central banks on a multilateral net basis.

Participants include the central banks of Bangladesh, Belarus, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan, and the Maldives Monetary Authority (MMA).

In November 2024, RBI and the Maldives Monetary Authority signed an agreement to establish a framework to promote the use of local currencies, INR and MVR, for transactions between the two countries.

Following the signing of the Memorandum of Understanding (MoU), it has been decided that India's bilateral trade transactions with Maldives can also be settled in INR and/or MVR in addition to the ACU mechanism, as stated in the circular issued by RBI.

RBI further stated that this will take effect immediately.