RBI keen on strengthening its partnership with UAE

Shri Gunveer Singh, Chief General Manager of the Reserve Bank of India’s Department of Payment and Settlement Systems, said that India is looking forward to more meaningful cooperation with the UAE in the field of digital payments.

Speaking to the Emirates News Agency (WAM) on the sidelines of the G20 Summit in New Delhi, Singh said that cooperation with the UAE in digital payments is important for India given the two countries’ geographical proximity and the large Indian community in the UAE. He added that the two countries have already taken some steps to cooperate in this area, including signing two MoUs to strengthen use of national currencies for bilateral trade and link payment and financial messaging systems in July 2023.

Singh said that he is confident that the two countries can work together to further develop digital payments and make them more efficient and convenient for everyone. In July 2023 President His Highness Sheikh Mohamed Bin Zayed Al Nahyan, and Shri Narendra Modi, Prime Minister of the Republic of India, witnessed the exchange of two Memoranda of Understanding (MoUs) between the Central Bank of the UAE (CBUAE) and the Reserve Bank of India (RBI), aimed to support the rapid growth of trade relations between the two countries.

The first MoU defines a framework comprising various elements and measures to facilitate the settlement of trade transactions in the two national currencies (the UAE dirham and the Indian rupee) per the agreements set between importers and exporters. It also outlines the types of eligible transactions, allows opening and use of correspondent accounts for the benefit of financial institutions in both countries, promotes direct exchange rates between the two national currencies, and provides options for liquidity management in accordance with the laws and regulations of the two countries.

The second MoU aims to enable participants to benefit from the services of IPPs and local payment card schemes in the UAE and India. This will be achieved through the CBUAE Classification: Public direct integration of these systems, ensuring compliance with regulatory requirements in both countries. Furthermore, the agreement explores the possibility of leveraging both parties’ expertise in developing financial messaging systems and exploring potential linkages between similar systems in both countries.Singh added that India’s robust unified payments interface (UPI) achieved an impressive milestone by surpassing 10 billion transactions within a month. In August, the total number of UPI transactions reached an unprecedented 10.58 billion.

Meanwhile, the global efforts for reforms into the Multilateral Financial Institutions (MFIs) have gained momentum at the 18th Group of Twenty (G20) Leaders’ Summit in New Delhi. The New Delhi Declaration adopted by the G20 members, and statements of prominent leaders, including US President Joe Biden, reflected these accelerated efforts targeting MFIs, including the International Monetary Fund (IMF) and World Bank (WB), to make them more inclusive.

The New Delhi Declaration read the G20 is working to deliver better, bigger and more effective Multilateral Development Banks (MDBs) by enhancing operating models, improving responsiveness and accessibility, and substantially increasing financing capacity to maximise development impact.”We underscore the need for enhancing representation and voice of developing countries in decision-making in global international economic and financial institutions in order to deliver more effective, credible, accountable and legitimate institutions.” The international finance system must deliver significantly more financing to help developing countries and emerging market economies (EMEs) to fight poverty, tackle global challenges and maximise development impact, said the declaration. U.S initiative A White House statement said President Biden rallied G20 partners to agree to collectively mobilise more headroom and concessional finance to boost the World Bank’s capacity to support low- and middle-income countries.

“We are aiming for our joint contributions to deliver a one-time boost to International Bank for Reconstruction and Development (IBRD) equivalent to three times the World Bank’s annual non-concessional lending volume, and to double International Development Association’s crisis lending capacity.” The statement on Saturday added that this initiative will make the World Bank a stronger institution that is able to provide resources at the scale and speed needed to tackle global challenges and address the urgent needs of the poorest countries.In an interview with WAM last year, John F. Kerry, U.S. Presidential Envoy for Climate, had sought the developing world’s support in his “battle” to reform MFIs.