Currency swap in Saarc region extended till 2017

The union cabinet on Wednesday approved extending currency swap for Saarc member countries by two years up to November 14, 2017.

"The union cabinet, chaired by Prime Minister Narendra Modi, approved the proposal for a two-year extension with amendments to the framework on currency swap arrangement for Saarc member countries up to November 14, 2017," an official statement said.

The South Asian Association for Regional Countries (Saarc) is a 30-year-old geo-political and economic block of seven original members -- Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka. Afghanistan joined subsequently.

Under the facility, the Reserve Bank of India (RBI) offers swaps to each member country depending on their two-month import requirement and not exceeding $2 billion.

The RBI will negotiate the operational details with each of its counterpart in the Saarc region.

"As the framework enabled India to strengthen its ties with Saarc countries, the facility ensure financial stability, improve India's standing in the region and strengthen regional integration and inter-dependence," the statement noted.

The government approved the swap arrangement in 2012 to provide funds for short-term foreign exchange needs or to meet balance of payments crises.