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Asian Clearing Union is also known as the ACU. This is considered as a socio-economic organisation which is developed for the co-operation of different countries for seamless clearing systems related to payments which are made between the member states of the Union. The ACU have their headquarters in Tehran, Iran, and this organisation was established in the year 1974. The Asian Clearing Union is formed as an initiative of the United Nations Economic and Social Commission for Asia and Pacific. (ESCAP).
The main aim of this Union is to encourage some form of regional co-operation between the member countries and ensure that seamless services are carried out. The Asian Clearing Union[1] carries out responsibilities of facilitating payments of different member countries. Apart from the above objectives, the ACU ensures to promote multilateral co-operation between the member states to carry out and reduce payments between the member states.
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The following countries are the member states of the ACU
The above member states will include all the central banks and monetary authorities of the respective country. Hence, the RBI, as the central monetary authority of India, will be a member of the ACU.
India became a part of the ACU for international co-operation and development. Apart from this, facilitating payments between the respective member countries would be a hard task to achieve. Through the channel of ACU, it would be easier for promoting and carrying out payments between different member countries of the Union.
The RBI (Reserve Bank of India) from time to time, brings out instructions for authorised dealers while carrying out different transactions for the ACU. Authorised dealers are specific banks which are authorised under section 11 of the Foreign Exchange Management Act, 1999 for carrying out a different form of foreign exchange transactions. All authorised banks have to follow respective instructions brought out by the RBI from time to time.
Under the ACU, there are different units of the settlement of currency. These units of currency are known as the Asian Monetary Units (AMUs). Like the US dollar and Euro, the AMUs which are dealt under the Asian Clearing Union are US-denominated AMU and Euro Denominated AMU.
Transactions which occur under the ACU standards will include the settlement which involves authorised dealers. If a transaction involves the member country, then the respective authorised dealer will be involved. Transactions will happen in the respective ACU dollar or ACU euro currency which is involved.
Other transactions in authorised banks which involve the normal dollar or euro currency will be treated separately for an ACU. Through the ACU payment channels are possible between the member countries.
Transactions under the ACU system have to be carried out through the authorised banks (category-I) along with other member countries. Hence authorised banks will correspond with intermediary banks of other member countries to carry out a different form of transactions.
If there is any excess amount, then the same has to be dealt with under normal banking conditions which are followed by the respective member state.
The following transactions are permitted under the Asian Clearing Union Mechanism:
Varun Hariharan has completed the Legal Practice Course from BPP Law School, Manchester. He has a Masters in Commercial and Corporate Law from the Queen Mary University of London and LLB Honours from Bangor University, UK. He specialises in law related to corporate, artificial intelligence and technology law.
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