The Reserve Bank of India (RBI) has put in place a revised framework on currency swap arrangements with South Asian Association for Regional Cooperation (SAARC) countries for the period 2024 to 2027.

The objective is to fund short-term foreign exchange liquidity requirements or balance of payment crises of the SAARC countries till longer term arrangements are made.

Under this Framework, the Reserve Bank would enter into bilateral swap agreements with SAARC central banks, who want to avail of the swap facility.

The Currency Swap Facility will be available to all SAARC member countries, subject to their signing the bilateral swap agreements, the RBI said in a statement.

The SAARC grouping consists of Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka.

As part of the revised framework for 2024-27, a separate Rupee Swap Window has been introduced with various concessions for swap support in Indian rupee. The total corpus of the rupee support is Rs 250 billion.

The RBI will continue to offer swap arrangement in US$ and Euro under a separate US Dollar/ Euro Swap Window with an overall corpus of US$ 2 billion.

The SAARC Currency Swap Facility came into operation on 15 November 2012 to provide a backstop line of funding for short term foreign exchange liquidity requirements or balance of payment crises.

In 2020, the US Federal Reserve announced a currency swap facility with the RBI. Currency swap facilities help countries gain access to dollars needed to pay for imports.