The Framework on Currency Swap Arrangement for SAARC Countries, 2024-2027 is a financial scheme put in place by the Reserve Bank of India (RBI) with the concurrence of the Government of India. A currency swap agreement is a contract between two parties to exchange currencies with predetermined terms and conditions for liquidity support. The original SAARC Currency Swap Facility was first operationalized on November 15, 2012, to provide a backstop line of funding for short-term foreign exchange liquidity requirements or balance of payments crises for SAARC countries until longer-term arrangements could be made.
The framework works by having the RBI enter into bilateral swap agreements with the central banks of the SAARC member countries that wish to avail the facility. The revised framework for 2024-2027 replaced the previous 2019-2022 framework. A significant change in the new framework is the introduction of a separate INR Swap Window with various concessions for swap support in Indian Rupee. The total corpus for this Rupee support is ₹250 billion (Rs 25,000 crore). The RBI will also continue to offer swap arrangements in US Dollars and Euros under a separate US Dollar/Euro Swap Window with an overall corpus of $2 billion. The facility is available to all SAARC member countries—Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, and Sri Lanka—provided they sign the bilateral swap agreements. This framework connects to the broader concept of bilateral swap arrangements recognized in the Global Financial Safety Net and aims to promote the internationalization of the Indian Rupee.