The Asian Clearing Union (ACU) was established with its head-quarters at Tehran, Iran, on December 9, 1974 at the initiative of the United Nations Economic and Social Commission for Asia and Pacific (ESCAP), for promoting regional co-operation. The main objective of the clearing union is to facilitate payments among member countries for eligible transactions on a multilateral basis, thereby economizing on the use of foreign exchange reserves and transfer costs, as well as promoting trade among the participating countries.
Members of the ACU
The Central Banks and the Monetary Authorities of Bangladesh, Bhutan, India, Iran, Maldives, Myanmar, Nepal, Pakistan and Sri Lanka are currently the members of the ACU.
Unit of settlement of ACU transactions
The Asian Monetary Units (AMUs) is the common unit of account of ACU and is denominated as ‘ACU Dollar’ and ‘ACU Euro’, which is equivalent in value to one US Dollar and one Euro respectively. All instruments of payments under ACU have to be denominated in AMUs. Settlement of such instruments may be made by AD Category-I banks through the ACU Dollar Accounts and ACU Euro Accounts, which should be distinct from the other US Dollar and Euro accounts respectively maintained for non ACU transactions. As the payment channel for processing ‘ACU Euro’ is under review, the operations in ‘ACU Euro’ have been temporarily suspended with effect from July 01, 2016 and accordingly, all eligible current account transactions including trade transactions in “Euro” are permitted to be settled outside the ACU mechanism until further notice.
Procedure for settlement of ACU transactions
i)Majority of transactions, as possible, should be settled directly through the accounts maintained by AD Category-l banks with banks in the other participating countries and vice versa; only the spill-overs in either direction are required to be settled by the Central Banks in the countries concerned through the Clearing Union. At all times, the balances maintained in the ACU Dollar and ACU Euro accounts should be commensurate with requirements of the normal business. With effect from July 01, 2016, all eligible current account transactions including trade transactions in “Euro” are permitted to be settled outside the ACU mechanism until further notice.
ii) AD Category-l banks are permitted to settle commercial and other eligible transactions in much the same manner as other normal foreign exchange transactions.
Transactions which are eligible to be settled through the ACU
The following payments are eligible to be settled through ACU:-
- for export / import transaction between ACU member countries on deferred payment terms; and
- not declared ineligible as mentioned below.
Payments that are not eligible to be settled through the ACU
The following payments are not eligible to be settled through ACU:-
- Payments between Nepal and India and Bhutan and India, exception being made in the case of goods imported from India by an importer resident in Nepal who has been permitted by the Nepal Rastra Bank to make payments in foreign exchange. Such payments may be settled outside ACU mechanism; and
- Payments that are not on account of export / import transactions between ACU members countries except to the extent mutually agreed upon between the Reserve Bank and the other participants; and
- All eligible current account transactions including trade transactions with Iran should be settled in any permitted currency outside the ACU mechanism until further notice.