UAE (16/07/2023): On Saturday, India and the United Arab Emirates (UAE) signed a Memorandum of Understanding (MoU) to establish a framework for bilateral transactions to be settled in their respective native currencies.
The governments have agreed to connect India’s Unified Payments Interface (UPI) with the UAE’s Instant Payment Platform (IPP), allowing users in either country to make fast, convenient, safe, and cost-effective cross-border cash transfers.
The Memorandum of Understanding (MoU) was signed by Reserve Bank of India (RBI) Governor Shaktikanta Das and Khaled Mohamed Balama, Governor of the Central Bank of UAE, a day after India and France agreed to allow the use of the Unified Payments Interface (UPI) in France.
The RBI and CBUAE agreed to investigate the possibility of integrating payment messaging systems.
The central bank stated that under the ‘Payments and Messaging Systems’ Memorandum of Understanding, the two central banks agreed to collaborate on:
linking their Fast Payment Systems (FPSs) – Unified Payments Interface (UPI) of India with Instant Payment Platform (IPP) of UAE;
linking the respective Card Switches (RuPay switch and UAESWITCH); and exploring the linking of payments messaging systems i.e., Structured Financial Messaging System (SFMS) of India with the messaging system in the UAE.
In a statement released on July15, the RBI said, “The UPI-IPP linkage will enable the users in either country to make fast, convenient, safe, and cost-effective cross-border funds transfers. The linking of Card Switches will facilitate the mutual acceptance of domestic cards and the processing of card transactions. The linkage of messaging systems is aimed to facilitate bilateral financial messaging between the two countries.”
NIPL stated in April 2022 that BHIM UPI was made live at NEOPAY terminals, the payment subsidiary of Mashreq bank, in the UAE, with the goal of enabling millions of Indians who travel to the UAE to make payments safely and conveniently using BHIM UPI.
In the UAE, PhonePe already supports ‘UPI international’ payments, which allow Indian users going overseas to pay foreign businesses using UPI. Indian visitors and NRIs living in the UAE can also utilise UPI-based mobile applications to make purchases at merchants and businesses in the UAE.
The RBI also stated that the establishment of a local currency settlement mechanism with the UAE would allow traders to invoice and pay in their respective home currencies, allowing the RBI to increase its reserves.
PM Narendra Modi was in the UAE for one day following a successful two-day visit to Paris. In Abu Dhabi, Modi was received with a ceremonial welcome at the Qasr-Al-Watan — the presidential palace — where he was greeted by the UAE President.
Apart from bilateral trade and cross-border activities, Modi guaranteed the UAE’s COP-28 president of India’s full support during constructive talks with the UN climate conference’s President-designate Sultan Al Jaber in Abu Dhabi on Saturday.
