The Reserve Bank of India (RBI) on Thursday, June 27, announced that with the concurrence of the Government of India, it has decided to put a revised Currency Swap Arrangement Framework for SAARC Countries and this new framework will be in place for the period from 2024 to 2027.
The aim of this development is to provide stability and support to SAARC nations during the times of short-tern foreign exchange liquidity needs or balance of payment crises, the RBI said in the press release.
History and Purpose
Initially, the SAARC Currency Swap Facility was launched on November 15, 2012 and its primary purpose was to offer a safety net for SAARC countries facing immediate foreign exchange shortages until they could secure more long-term financial arrangements.
Reserve Bank of India (RBI) | Representative
Key Features of the 2024-2027 Framework
Bilateral Swap Agreements
The RBI will enter into bilateral swap agreements with SAARC central banks that wish to use the swap facility.
INR Swap Window
A new Indian Rupee (INR) Swap Window has been introduced.
The total corpus for Rupee support is Rs 250 billion. This window includes various concessions to facilitate swap support in Indian Rupee.
US Dollar/Euro Swap Window
The RBI will continue to offer swap arrangements in US Dollars (US$) and Euros (€). The overall corpus for this window is USD 2 billion.
This separate window ensures that countries have access to major global currencies during financial crises.
Eligibility and Participation
The Currency Swap Facility is open to all SAARC member countries. However, these countries must sign bilateral swap agreements with the RBI to avail themselves of the facility.
