The Union Cabinet of India, chaired by the Prime Minister Narendra Modi has given its ex-post-facto approval for entering into an agreement with the Central Bank of Sri Lanka for extending US$1.1 billion as a special /ad-hoc swap outside the Framework on Currency Swap Arrangement for South Asian Association for Regional Cooperation (SAARC) Member Countries, ANI reported.

India has a Framework on Currency Swap Arrangement for SAARC Member Countries since 2012. The facility is available to all SAARC member countries with a floor of US $100 million and ceiling of US $ 400 million within overall limit of US$ 2 billion and is valid till November 14, 2015.

Reserve Bank of India ( RBI ) in their letter dated February 18, 2015 has proposed to make available US$400 million to Sri Lanka under this Framework and the remaining US$1.1 billion as a special/ad-hoc swap facility outside the Framework, but with the same terms and conditions, for 6 months against the request of the Central Bank of Sri Lanka.

This will help Sri Lanka in availing a safety net against the probable volatility of their currency and provide short-term liquidity that would contribute to Sri Lanka's economic recovery. This will also strengthen India's bilateral relations and economic ties with Sri Lanka.
(With inputs from ANI)