Standby Swap $400mn in Overall USD2bn Facility Approved between
SAARC Member
[PIB Press Release dated 23rd January
2018]
The Union Cabinet, chaired by the Prime
Minister Shri Narendra Modi has given ex-post facto approval for amendment to
the 'Framework on Currency Swap Arrangement for SAARC Member Countries' to
incorporate a 'Standby Swap' amounting to USD 400 million operated within the
overall size of the Facility of USD 2 billion and build in flexibility with
respect to modalities of its operation, such as period of swap, roll over, etc.
after due consideration of conditions of requesting SAARC member countries and
domestic requirements of India.
Salient features:
Due to heightened financial risk and volatility
in global economy, short term swap requirements of SAARC countries could be
higher than the agreed lines. The incorporation of 'Standby Swap' within the
approved SAARC Swap Framework would provide necessary flexibility to the
Framework and would enable India to provide a prompt response to the current
request from SAARC member countries for availing the swap amount exceeding the
present limit prescribed under the SAARC Swap Framework.
Background:
Cabinet approved the Framework on Currency Swap
Arrangement for SAARC Member Countries on March 1, 2012 with the intention to
provide a line of funding for short term foreign exchange requirements or to
meet balance of payments crises till longer term arrangements are made or the
issue is resolved in the short-term itself. Under the Facility, RBI offers
swaps of varying sizes in USD, Euro or INR to each SAARC member country
depending on their two months import requirement and not exceeding US$ 2
billion in total. The swap amount for each country has been defined in the
above Facility, subject to a floor of USD 100 Million and a maximum of USD 400
Million. Each Drawal will be for three months tenor
and upto maximum of two rollovers.
RBI will negotiate the operational details
bilaterally with the Central Banks of the SAARC countries availing the Standby
Swap.