The Reserve Bank of India (RBI) has signed a currency swap agreement with the Central Bank of Sri Lanka, the central bank said on Monday.
The Central Bank of Sri Lanka can make drawals of US Dollar, Euro or Indian Rupee in multiple tranches up to a maximum of $400 million or its equivalent under a currency swap agreement, the RBI said in a release.
The agreement signed under the SAARC Currency Swap Framework 2019-22 would be valid till November 13, 2022.
The SAARC currency swap framework came into operation on November 15, 2012, to provide a backstop line of funding for short term foreign exchange liquidity requirements or short-term balance of payments stress till longer term arrangements are made.
In November last year, the RBI, with the concurrence of the Government of India, had decided to put in place a revised framework on currency swap arrangement for SAARC countries 2019-2022 with an aim to further financial stability and economic cooperation within the SAARC region.
The framework is valid from November 14, 2019 to November 13, 2022.
Based on the terms and conditions of the framework, the RBI would enter into bilateral swap agreements with SAARC central banks, who want to avail swap facility.
Under the framework for 2019-22, RBI will continue to offer swap arrangement within the overall corpus of USD 2 billion. The drawals can be made in US Dollar, Euro or Indian Rupee. The Framework provides certain concessions for swap drawals in Indian Rupee.
The facility is available to all SAARC member countries, subject to their signing the bilateral swap agreements.
Besides India, the other South Asian Association for Regional Cooperation (SAARC) member countries are - Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan and Sri Lanka.