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International Relations April 24, 2026 4 min read Daily brief · #18 of 25

India approves Rs 30 billion for Maldives under SAARC currency swap

India approved the first withdrawal of Rs 30 billion (approximately USD 360 million) for the Maldives under the INR Swap Window of the SAARC Currency Swap Fr...

GS Paper 2 (bilateral relations regional groupings) and GS Paper 3 (Indian economy RBI external sector)

What Happened

  • India approved the first withdrawal of Rs 30 billion (approximately USD 360 million) for the Maldives under the INR Swap Window of the SAARC Currency Swap Framework for 2024–2027.
  • The approval coincides with the maturity of the earlier USD 400 million swap availed by the Maldives in October 2024, which the Maldives settled in full on April 24, 2026 — demonstrating the country's commitment to meeting its financial obligations.
  • The new Rs 30 billion facility is denominated in Indian Rupees (INR), reflecting the growing emphasis on INR internationalisation in India's regional economic diplomacy.
  • The current SAARC Currency Swap Framework is operative from 2024 to 2027 and was formalised between the Reserve Bank of India (RBI) and the Maldives Monetary Authority (MMA) during the Maldivian President's state visit to New Delhi in October 2024.
  • Since the SAARC Currency Swap Framework's inception in 2012, India has provided an aggregate swap support of USD 1.1 billion to the Maldives.

Static Topic Bridges

SAARC Currency Swap Framework

The SAARC Currency Swap Facility was established on November 15, 2012, by the Reserve Bank of India to provide a backstop line of funding for short-term foreign exchange liquidity requirements or balance-of-payments crises in SAARC member countries. The framework is a bilateral arrangement — the RBI enters into agreements with individual SAARC central banks rather than operating through the SAARC Secretariat.

  • The current framework covers the period 2024–2027, revised from the prior 2019–2022 and 2022–2024 cycles.
  • The 2024–2027 framework introduced a dedicated INR Swap Window with total capacity of Rs 250 billion across all eligible SAARC members.
  • Eligible members include Afghanistan, Bangladesh, Bhutan, Maldives, Nepal, Pakistan, and Sri Lanka (all SAARC members other than India itself).
  • The USD/Euro Swap Window has a separate overall cap; the Maldives' MMA is eligible for up to USD 400 million under that window.

Connection to this news: The Rs 30 billion approval is the first withdrawal under the INR Swap Window of the new 2024–2027 framework for the Maldives — a significant shift from purely USD-denominated support.

India's Neighbourhood First Policy and Financial Diplomacy

India's Neighbourhood First Policy, enunciated since 2014, prioritises strong bilateral ties with immediate neighbours through enhanced connectivity, economic assistance, and people-to-people links. Currency swap support is one of the key instruments of India's financial diplomacy in the region, providing rapid liquidity assistance without requiring the recipient to go through IMF conditionalities.

  • India has extended similar currency swap and credit line support to Sri Lanka (USD 4 billion package in 2022 during the economic crisis), Bhutan, and Nepal.
  • Currency swaps operate as short-term loans: the recipient draws down in one currency and repays in the agreed currency (here, INR) at a predetermined exchange rate.
  • India has also extended USD 50 million budgetary support to Maldives in 2024.

Connection to this news: The swap approval reaffirms India's role as the primary financial stabiliser in the South Asian neighbourhood, signalling a strategic commitment to Maldives' macroeconomic stability at a time of external financial stress.

INR Internationalisation

INR internationalisation refers to the increasing use of the Indian Rupee in cross-border trade settlement, investment, and financial transactions. The RBI's Internationalisation Roadmap (released in 2023) identified currency swap arrangements as a key lever. By offering INR-denominated swaps, India reduces the recipient's need for USD while promoting INR use in bilateral economic relations.

  • The RBI issued a circular in July 2022 allowing trade settlement in INR — a foundational step toward internationalisation.
  • India has signed bilateral rupee trade agreements with 22 countries as of 2024.
  • The INR Swap Window under the SAARC framework (capacity: Rs 250 billion) is a direct instrument of this policy.

Connection to this news: The Rs 30 billion INR-denominated swap for the Maldives is emblematic of India's broader push to anchor regional financial relationships in the Indian Rupee.

Balance of Payments (BoP) and External Sector Stability

A country's Balance of Payments records all economic transactions with the rest of the world. A BoP crisis occurs when foreign exchange reserves fall below the level needed to meet near-term obligations. Currency swaps are used as a buffer — they temporarily augment reserves, giving the recipient time to stabilise without triggering a disorderly depreciation or sovereign default.

  • The Maldives economy is heavily dependent on tourism (over 25% of GDP) and imports almost all consumer goods, making it vulnerable to forex shortfalls.
  • The IMF's Article IV consultation reports have flagged external sector vulnerabilities for the Maldives in recent years.
  • The Rs 30 billion swap is aimed at managing BoP pressures, stabilising forex reserves, and ensuring smooth external payments.

Connection to this news: The swap provides the Maldives a critical buffer against potential balance-of-payments stress, particularly as it manages its debt obligations while sustaining essential imports.

Key Facts & Data

  • Amount approved: Rs 30 billion (INR Swap Window, SAARC Currency Swap Framework 2024–2027)
  • Previous swap settled: USD 400 million, availed October 2024, matured April 24, 2026
  • Total SAARC swap support to Maldives since 2012: USD 1.1 billion (aggregate)
  • INR Swap Window total capacity under 2024–2027 framework: Rs 250 billion (across all SAARC members)
  • USD/Euro Swap Window limit for Maldives: USD 400 million
  • SAARC Currency Swap Facility inception date: November 15, 2012
  • Framework signed during Maldivian President's state visit to New Delhi: October 2024
On this page
  1. What Happened
  2. Static Topic Bridges
  3. SAARC Currency Swap Framework
  4. India's Neighbourhood First Policy and Financial Diplomacy
  5. INR Internationalisation
  6. Balance of Payments (BoP) and External Sector Stability
  7. Key Facts & Data
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