RBI signs pact with Bank of Mauritius to promote INR, Mauritian Rupee for bilateral transactions

Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have signed a pact for establishing a framework to promote the use of the Indian Rupee and the Mauritian Rupee (MUR) for cross-border transactions. The Memorandum of Understanding (MoU) was signed by RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen G C S K, the central bank said in a statement on Tuesday.

"The MoU documents were exchanged in Port Louis, Mauritius in the presence of the Prime Minister of India Narendra Modi and Prime Minister of Mauritius Navinchandra Ramgoolam, on Wednesday, March 12, 2025," said the statement.

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

The 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. Use of local currencies would optimise costs and settlement time for transactions.

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RBI signs pact with Bank of Mauritius: Here's what the deal entails

"This collaboration marks a key milestone in strengthening the bilateral cooperation between RBI and BOM," said RBI. The 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 MoU will culminate in the implementation of the INR-MUR Local Currency Settlement (LCS) System to reduce dependency on hard currencies for cross-border transactions. The LCS will help Mauritius and India further develop their respective exchange markets and facilitate bilateral trade and settlement, direct investment, remittances, financial market development, economic growth and stability. 

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The MoU also provides for cooperation to create an INR Clearing Centre in Mauritius, and the inclusion of the INR as a settlement currency in the Mauritius Automated Clearing and Settlement System. As such, commercial banks would be able to hold an account in INR at the Bank of Mauritius for transactions in INR. 

The INR clearing Centre will ultimately be extended to the Common Market for Eastern and Southern Africa's Regional Payment and Settlement System (COMESA), for which the Bank of Mauritius is the settlement bank. It is proposed that the INR be included as a settlement currency. This initiative will promote Mauritius as a jurisdiction for clearing and settlement in INR on the continent.