The Reserve Bank of India (RBI) signed a currency swap agreement with the Central Bank of Sri Lanka on Friday, according to a RBI press release.
Currency swap agreements exist to assist countries during periods of tight liquidity or balance of payments and liquidity crises. Under this agreement, Sri Lanka can draw a maximum of $1.1 billion for a period of up to six months. The agreement is in addition to the existing framework on currency swap arrangement for the SAARC member countries, an arrangement by which SAARC members can draw currency $100 million-$400 million, with a total limit of $2 billion, from an RBI financing facility set up for this purpose. India and Sri Lanka’s central banks signed a currency swap agreement in March 2015 under the SAARC Framework, agreed during Prime Minister Narendra Modi’s visit to the island nation.