GS 3: Economy

Why in news?

The Union Cabinet headed by Prime Minister Narendra Modi has approved the amendments to the framework on Currency Swap Arrangement for SAARC member countries.

Highlights:

• Amendments to Currency Swap Arrangement for SAARC nations approved by Cabinet
• The amendments incorporate a standby facility of USD 400 million.
• This stand-by facility enables 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.

SAARC Swap Framework:

• The Framework on Currency Swap Arrangement for SAARC Member Countries was formulated with the intention to provide a line of funding for short term foreign exchange requirements or to meet the balance of payments crises till longer-term arrangements are made or the issue is resolved in the short-term itself.
• It was approved by the Government of India on March 1st, 2012.
• The agreement has enabled India to strengthen its ties with the SAARC countries together with improving financial stability in the region.
• This agreement also bolsters the credibility of India among the SAARC countries.
• Together with enhancing India’s economic influence in the region, the agreement strengthens regional integration and inter-dependence.