How do Asian Clearing Union rules affect payments to Indian exporters?

The Asian Clearing Union (ACU) is an arrangement among the central banks of member countries for settling eligible payments between their residents.¹³ Most Indian freelancers never meet it. It matters if you are, say, a software developer with a client in Nepal, a design studio working for a resort in the Maldives, or an engineering consultant paid by a company in Sri Lanka, because the Reserve Bank of India (RBI) has separate payment rules for ACU countries.

What is the Asian Clearing Union?

The Asian Clearing Union is a payment arrangement among central banks of participating countries for settling eligible payments between residents of member countries; RBI's regulations name it the ACU and use its agreement's definition.¹ ACU transactions are denominated in their own units.³

• Settlement units: RBI's circular of 17 March 2020 says that, effective 6 March 2020, participants may settle in ACU Dollar, ACU Euro or ACU Yen, "equivalent in value to one US Dollar, one Euro and one Japanese Yen respectively".³
• ACU accounts: Indian AD banks may open ACU Dollar, ACU Euro and ACU Yen accounts with correspondent banks in other participating countries, and eligible payments are settled through these accounts.³
• ACU Euro: operations in ACU Euro were temporarily suspended from 1 July 2016.³
• Commercial bank accounts: since 2015, RBI has also permitted the use of commercial banks' ACU accounts (nostro accounts) for settling exports and imports of goods and services among ACU countries.⁶

Your bank, not you, operates these accounts.

Who do RBI's ACU payment rules apply to?

RBI's ACU payment rules apply to Indian exporters paid by residents of ACU member countries, with separate rules for Nepal and Bhutan. Regulation 3 of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023 splits trade receipts into three groups:¹

The ACU row is the wording in force since an amendment notified on 10 February 2025.¹ RBI's own documents refer to Nepal and Bhutan as ACU members in the regulations, and its circulars and Master Direction deal with Sri Lanka, the Maldives, Myanmar and Iran under the ACU heading.¹⁴⁵⁷ RBI's documents we checked do not give a full current membership list, so confirm with your bank whether your client's country participates before agreeing payment terms.

How do you receive payment from a client in an ACU country?

You receive payment from a client in an ACU country by agreeing the route and currency with your bank before you invoice, since your bank applies the ACU rules.¹

1. Ask your bank early: tell it the client's country and the currency, and ask whether the payment must go through ACU.¹
2. Name the right currency: if the payment will go through ACU, the invoice currency and the client's payment instruction need to fit the ACU route.³
3. Check for exceptions: for Sri Lanka and the Maldives, other routes are expressly allowed.⁴⁵
4. Keep the usual export paperwork: file the Export Declaration Form and realise the invoice within nine months of the invoice date, or twelve months if invoiced or settled in rupees.⁸

The FEMA (Export and Import of Goods and Services) Regulations, 2026 point back to the 2023 receipt rules for the manner of receipt.⁸

What currencies and exceptions apply to ACU payments?

ACU payments settle in ACU Dollar, ACU Euro or ACU Yen, and RBI has relaxed the ACU route for some countries.³⁴⁵⁷

The Myanmar and Iran rows are as recorded in RBI's Master Direction on Export of Goods and Services, which was superseded from 1 October 2026.⁷ Ask your bank whether the Myanmar and Iran relaxations still apply in the same form. For Iran, also read payments from sanctioned countries.

What happens when one party is not resident in an ACU country?

When one party is not resident in an ACU country, the payment falls under the general rule of rupees or any foreign currency, because the amended wording ties the ACU route to a resident of one participant country paying a resident of another.¹²

• Before February 2025: the regulation said trade with ACU members other than Nepal and Bhutan was to go "through ACU mechanism or as per the directions issued by the Reserve Bank", with one carve-out: imports shipped from an ACU country by a supplier resident outside the ACU could be paid as for non-ACU countries.¹
• Reason for the change: RBI's Annual Report says the amendment was made so that trade payments are routed through the ACU mechanism only if they are between two residents in the territory of ACU member countries.²
• For example: a client in an ACU country paying through a group company elsewhere falls under the general rule.¹

Your bank decides how a specific payment is routed.

Which RBI rule says how ACU payments work?

Regulation 3 of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2023, as amended on 10 February 2025, sets the ACU rule, and RBI circulars set the settlement units and country exceptions.¹³

What are the common mistakes with ACU payments?

The common mistakes with ACU payments are assuming every neighbouring country follows the same rule and invoicing before checking the route with the bank.¹⁴⁵

• Treating all neighbours alike: Nepal and Bhutan follow a rupee rule, while Sri Lanka and the Maldives have their own exceptions.¹⁴⁵
• Relying on old Master Direction entries: the Myanmar and Iran relaxations come from a Master Direction superseded from 1 October 2026.⁷
• Invoicing in ACU Euro: operations in ACU Euro were suspended from 1 July 2016.³
• Forgetting the export paperwork: the EDF and realisation period still apply.⁸

For rupee settlement in general, see export invoicing in INR. For country-specific steps, see receiving money from Sri Lanka.