India revokes UAE operator's authorization to handle cross-border transactions
India's central bank announced the decision in a statement noting that the UAE's exchange body showed “non-compliance with regulatory requirements.”
The Reserve Bank of India said Friday it had revoked its authorization for the Dubai-based UAE Exchange Centre to act as a payment system operator over failure to comply with regulatory requirements.
The body is a remittance, foreign exchange and bill payment firm with a network of around 800 offices in 31 countries. It has 150 branches in the UAE.
India's central bank announced the decision in a statement reading that UAE Exchange Centre showed “non-compliance with regulatory requirements” without giving any further details. Although the decision was announced Friday, the statement read that the revocation came into effect on Oct. 10.
The UAE is home to some 3.5 million Indians, according to the Indian Embassy in Abu Dhabi. India tops the list of countries in terms of remittances sent from the UAE. The subcontinent received around $125 billion in remittances in 2023, with the UAE accounting for 18% of this inflow.
In July of 2023, the Emirati and Indian central banks signed two memoranda of understanding to strengthen the use of national currencies for bilateral trade and link payment and financial messaging systems.
Indian Prime Minister Narendra Modi signed the agreements on a visit to the UAE.
Under the agreement, the two institutions agreed to work together to develop a framework that promotes the use of their respective national currencies, the UAE dirham and the Indian rupee, in cross-border transactions. The framework is intended to streamline payment services in both countries by linking their instant payment platforms, local payment card systems and financial messaging systems.
Al-Monitor has contacted the RBI and UAE Exchange Centre for comment.
