RBI and Bank of Mauritius sign pact on use of local currencies for bilateral transactions

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The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have signed a Memorandum of Understanding (MoU) for establishing a framework to promote the use of local currencies - the Indian Rupee (INR) and the Mauritian Rupee (MUR) - for cross-border transactions. The MoU was signed by RBI Governor Sanjay Malhotra and Dr Rama Krishna Sithanen, the the Governor of the Bank of Mauritius.

The MoU documents were exchanged in Port Louis, Mauritius, in the presence of Prime Minister Narendra Modi and his counterpart, Dr Navinchandra Ramgoolam, last week.

The MoU aims to promote the use of INR and MUR in bilateral trade and covers all the current account transactions and permissible capital account transactions
as agreed upon by both the countries.

This framework would enable exporters and importers to invoice and pay in their respective domestic currencies, which in turn, would enable the development of a market in the INR-MUR pair, a press release issued by RBI stated. The use of local currencies would optimise costs and settlement time for transactions, it further said.

According to the central bank, the collaboration marks a key milestone in strengthening bilateral cooperation between RBI and BOM. "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," the release added.

PM Modi was on a two-day visit to Mauritius to take part in the National Day celebrations of the island country last week.

During his visit, the two countries signed several pacts. One of the MoUs was between the Enforcement Directorate (ED) and the Financial Crimes Commission (FCC) of Mauritius.

During the discussions leading to the MoU, the ED and the FCC explored the possibilities of "joint operations" to detect, investigate, and prosecute cross-border money laundering offences, India's probe agency had said earlier.

They also underlined the significance of exchange programmes, experience sharing, training, and skill building of the officers of both the organisations, ED stated.

"Discussions were held on how ED can assist FCC by providing technological assistance and sharing of their digital forensic tools and best practices, towards ensuring better data seizing and extraction, and more productive data analysis," the statement said.

ED Director Rahul Navin highlighted the agency's expertise in financial crime investigations, its "high" conviction rate in money laundering trials, and "successful" track record in asset tracing, confiscation, and recovery.