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Cabinet approves amendment to framework on currency swap pact for SAARC countries

ANI | Updated: Jan 23, 2019 18:08 IST

New Delhi, Jan 23 (ANI): The Union Cabinet on Wednesday approved an amendment to the framework on currency swap arrangement for SAARC countries to incorporate a stand-by swap amounting to 400 million dollars operated within the overall size of two billion dollar facility.
Due to increasing financial risk and volatility in the global economy, short-term swap requirements of SAARC countries could be higher than the agreed lines. The incorporation of standby swap within the approved SAARC Swap Framework will provide necessary flexibility to the framework.
It will enable India to respond quickly to the current request from SAARC member countries for availing the swap amount exceeding the present limit prescribed under the SAARC Swap Framework, said Ravi Shankar Prasad, Union Minister of Law & Justice and Electronics and Information Technology while briefing reporters after the Cabinet meeting.
On March 1, 2012 the Union Cabinet had approved the Framework on Currency Swap Arrangement for SAARC Member Countries to provide a line of funding for short-term foreign exchange requirements or to meet balance of payments crises till longer-term arrangements are made or the issue is resolved in the short-term itself.
Under the facility, the Reserve Bank of India (RBI) offers swaps of varying sizes in US dollars, Euro or Indian rupees to each SAARC member country, depending on their two months' import requirement and not exceeding two billion dollars.
The swap amount for each country has been defined in the facility, subject to a floor of 100 million dollars and a maximum of 400 million dollars. Each drawal will be for three months tenor and upto maximum of two roll-overs.
The RBI will negotiate the operational details bilaterally with the central banks of SAARC countries availing the stand-by swap. (ANI)