The Reserve Bank of India (RBI) last week signed an agreement with the Central Bank of Sri Lanka which will enable the latter to withdraw up to $400mn in US Dollars or Euros.
"The Central Bank of Sri Lanka can make drawals of US Dollar or Euro in multiple tranches up to a maximum of USD 400 million or its equivalent," RBI said in a statement.
The agreement will be valid for three years and is expected to further economic co-operation between the two countries, the statement said, adding that it will also further financial stability in the region.
The swap arrangement is intended to provide a backstop line of funding for countries that are part of the South Asian Association for Regional Cooperation (SAARC) to meet any balance of payments and liquidity crises till long-term arrangements are made, PTI said.
In May 2012, RBI announced in the SAARCFINANCE Governor's meeting in Nepal, that it would offer swap facilities aggregating USD 2 billion, both in foreign currency and rupee to SAARC member countries.
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