The RBI & Bank of Mauritius Signed A Pact Today; What Does it Mean For You?
RBI-Bank of Mauritius Pact: How Local Currency Trade Changes the Game for Ordinary People
The Reserve Bank of India (RBI) and the Bank of Mauritius (BOM) have signed a pact today to promote using the Indian Rupee (INR) and Mauritian Rupee (MUR) for cross-border transactions, shifting away from the current dollar-dominated system. Signed by RBI Governor Sanjay Malhotra and BOM Governor Rama Krishna Sithanen G C S K, the deal was originally exchanged as an MoU on March 12 in Port Louis with Prime Ministers Narendra Modi and Navinchandra Ramgoolam present.
Current System: Right now, if an Indian sends money to Mauritius or buys goods from there, the transaction typically converts INR to U.S. dollars (USD) via banks or services like Western Union, then USD to MUR. Each step incurs exchange fees—often 2-5% per conversion—and delays, sometimes days, as funds clear through international networks like SWIFT. For example, sending Rs 10,000 might lose Rs 200-500 to fees, leaving less for the recipient, while importers face added costs passed onto consumers.
New System: The MoU allows direct INR-MUR use for everyday transactions—remittances, shopping, or trade—covering current account activities (like wages) and some investments. Banks can now settle payments in local currencies, skipping the USD middleman. This cuts fees (potentially to 1% or less) and speeds up transfers to hours, not days. A worker sending Rs 10,000 could save Rs 200, while a tourist paying MUR 1,000 for crafts avoids a 3% forex hit.
For the common man, this means more money stays in their pocket—whether supporting family in Mauritius or buying its exports like sugar. With $1 billion in annual trade, per India’s commerce ministry, this practical shift, effective post-framework rollout, promises real savings and simplicity over the clunky, costly dollar route.
