RBI revises framework on Currency Swap Agreements for SAARC 28/11/2019 – Posted in: Daily News

Currency Swap Agreements

 

For: Preliminary & Mains

Topics covered: About Currency Swap Agreements

 

News Flash

To further financial stability and economic cooperation within the SAARC region, the Reserve Bank of India with the union government has decided to put in place a revised Framework on Currency Swap Arrangement for SAARC countries 2019-2022. The framework is valid from November 14, 2019 to November 13, 2022.

 

Currency swap

A currency swap between countries is an agreement to exchange currencies with predetermined terms and conditions.

 

Key points

  • India, Bhutan, Afghanistan, Bangladesh, the Maldives, Pakistan, Nepal and Sri Lanka are part of SAARC grouping.
  • Under the framework for 2019-22, the central bank will continue to offer swap arrangement within the overall corpus of $2 billion.
  • The Reserve Bank of India would enter into bilateral swap agreements with SAARC central banks, who want to avail swap facility.
  • Earlier, the SAARC currency swap facility came into operation on November 15, 2012 with an intention to provide a backstop line of funding for short term foreign exchange liquidity requirements or balance of payment crises till longer-term arrangements are made.
  • The drawals can be made in US Dollar, Euro or Indian Rupee. The Framework provides certain concessions for swap drawals in Indian Rupee.

 

Source: ET

 

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