RBI revises framework for currency swap arrangements with Saarc countries

The Reserve Bank of India (RBI) on Thursday released a revised framework for currency swap arrangements with South Asian Association for Regional Cooperation (Saarc) countries. This framework will be effective from 2024 to 2027.

Under the framework, the RBI will enter into bilateral swap agreements with Saarc central banks that wish to utilise the swap facility.

“Under this framework, the Reserve Bank would enter into bilateral swap agreements with Saarc central banks who want to avail of the swap facility," said RBI in a release. “The Currency Swap Facility will be available to all Saarc member countries, subject to their signing the bilateral swap agreements,” it said further.

A new Rupee Swap Window has been introduced under the framework, offering various concessions to support swaps in Indian Rupees. The total corpus for this support amounts to Rs 25,000 crore. The RBI will continue to offer swap arrangements in US Dollars and Euros through a separate USD/Euro Swap Window, with an overall corpus of $2 billion.

The Saarc Currency Swap Facility came into operation on November 15, 2012, with the intention of providing a backstop line of funding for short-term foreign exchange liquidity requirements or balance of payment crises in Saarc countries until longer-term arrangements are established.