Cabinet approves the Amendment to the ‘Framework on Currency Swap Arrangement for SAARC Member Countries’

Cabinet approves Amendment to the

Question: What amount Cabinet approved for Amendment to the ‘Framework on Currency Swap Arrangement for SAARC Member Countries’ to incorporate ‘Standby Swap’?
(a) USD 200million
(b) USD 300 million
(c) USD 400 million
(d) USD 500 million
Answer: (c)

  • The Union Cabinet has given its 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 to be 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 and roll over.
  • Due to heightened 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 would provide the 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.
  • The Cabinet had previously 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 the balance of payments crises till long-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.

Links:
https://www.thehindubusinessline.com/economy/cabinet-clears-400-m-standby-swap-facility-for-saarc-nations/article26072299.ece
https://www.business-standard.com/article/news-cm/cabinet-approves-amendment-to-framework-on-currency-swap-arrangement-for-saarc-member-countries-119012300854_1
http://pib.nic.in/newsite/PrintRelease.aspx?relid=187698