Cabinet approves amendments to Currency Swap arrangement for SAARC nations
The Union Cabinet headed by Prime Minister Narendra Modi has approved the amendments to the framework on currency swap arrangement for SAARC member countries.
The amendments incorporate a standby facility of USD 400 million. This stand-by facility enables India to provide a prompt response to the current request from SAARC member countries for availing the swap amount exceeding the present limit prescribed under the SAARC Swap Framework.
SAARC Swap Framework
The Framework on Currency Swap Arrangement for SAARC Member Countries was formulated with the intention to provide a line of funding for short term foreign exchange requirements or to meet the balance of payments crises till longer-term arrangements are made or the issue is resolved in the short-term itself. It was approved by the Government of India on March 1st, 2012.
Under the framework RBI offers swaps of varying sizes to each SAARC Member countries depending on their two months import requirement, not exceeding US$ 2 billion in total, in USD, Euro or INR.
Benefits to SAARC and India
The agreement has enabled India to strengthen its ties with the SAARC countries together with improving financial stability in the region. This agreement also bolsters the credibility of India among the SAARC countries.
Together with enhancing India’s economic influence in the region, the agreement strengthen regional integration and inter-dependence.