India’s Chief General Manager of the Reserve Bank of India’s (RBI) Department of Payment and Settlement Systems, Gunveer Singh, has highlighted the importance of strengthening cooperation with the United Arab Emirates (UAE) in the field of digital payments. This collaboration is particularly significant due to the geographical proximity of the two nations and the substantial Indian community residing in the UAE.
Singh noted that several steps have already been taken to foster cooperation in this area. In July 2023, both countries signed two Memoranda of Understanding (MoUs) aimed at enhancing the use of their respective national currencies for bilateral trade and linking payment and financial messaging systems. These agreements were witnessed by UAE President Sheikh Mohamed bin Zayed Al Nahyan and Indian Prime Minister Narendra Modi.
The first MoU outlines a framework to facilitate the settlement of trade transactions in UAE dirhams and Indian rupees, including defining eligible transactions, allowing the use of correspondent accounts for financial institutions in both countries, promoting direct exchange rates between the two currencies, and offering liquidity management options.
The second MoU seeks to enable the use of Indian Payment Processors (IPPs) and local payment card schemes in both the UAE and India. This involves the direct integration of these systems to ensure regulatory compliance in both nations. Additionally, the agreement explores opportunities to leverage the expertise of both parties in developing financial messaging systems and establishing potential linkages between similar systems.
Singh also highlighted India’s impressive progress in digital payments, with the Unified Payments Interface (UPI) achieving a significant milestone by surpassing 10 billion transactions within a single month. In August, the total number of UPI transactions reached an unprecedented 10.58 billion, demonstrating the robustness and scalability of India’s digital payment infrastructure.
Cooperation between India and the UAE in the realm of digital payments not only benefits their respective populations but also fosters economic ties and trade relations between the two nations, making transactions more efficient and convenient for individuals and businesses alike.