- SAARC is a regional intergovernmental organization and was established with the signing of the SAARC Charter in Dhaka on 8 December 1985.
- 8 member States: Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka.
- The Secretariat is in Kathmandu, Nepal.
- SAARC works on the principle of consensus. INITIATIVE UNDER SAARC
- SAARC EMERGENCY FUND: India has asked the leaders of the SAARC countries to chart out a common strategy to combat COVID-19 in the region.
- SAARC ARBITRATION COUNCIL: SARCO was established to resolve cost-effective settlement of disputes via arbitration within the region.
- South Asian Regional Standard Organization to harmonize standards and promote cooperation in the fields of metrology, accreditation and conformity assessment for enhancing the capacity of the respective national institutions in conducting their technical tasks.
- SOUTH ASIAN UNIVERSITY was established in Delhi.
- SAARC DEVELOPMENT FUND is a comprehensive funding mechanism with the provision of three Windows (Social, Economic and Infrastructure).
- Members: Bangladesh, Bhutan, India, Maldives, Myanmar, Nepal & Sri Lanka (Pakistan is not included while Myanmar is there, among SAARC members).
- A project-based partnership that aims to promote regional prosperity, improve economic opportunities and build a better quality of life in the subregion.
VISION
- Boost intraregional trade & cooperation in South Asia
- Developing connectivity and trade with Southeast Asia through Myanmar, China and the global market.
PRIORITY SECTORS
- Transport
- Trade Facilitation
- Energy
- Economic Corridor Development.
SAARC CURRENCY SWAP
- SAARC Currency Swap Framework came into operation on November 15, 2012.
- RBI can offer a swap agreement with an overall corpus of USD 2 billion
- Swap drawals can be made in USD, EURO or Indian Rupee
- Recently the Reserve Bank of India signed a Currency Swap Agreement with the Maldives Monetary Authority (MMA) to enable MMA to make drawals in multiple tranches up to a maximum of $200 million from the RBI.
- In 2020, the RBI signed a similar pact for extending up to a $400 million currency swap facility to Sri Lanka.
CURRENCY SWAP FRAMEWORK
- RBI has revised the currency swap arrangement for SAARC countries for 2019-2022.
- India and Japan signed a bilateral currency swap agreement in 2018.
- A foreign currency swap is an agreement to exchange currency between two foreign parties. The agreement consists of generally swapping principal and interest payments on a loan made in one currency, for principal and interest payments on a loan of equal value in another currency.
- The purpose of engaging in a currency swap is usually to procure loans in foreign currency at more favourable interest rates than if borrowing directly in a foreign market.
- Currency swaps are done to reduce exposure to anticipated fluctuations in exchange rates.
- This facility will enable the agreed amount of foreign capital to be available to India for use as and when the need arises. So, there is no immediate cost when an amount is withdrawn by India.
- It would bring greater stability to foreign exchange & capital markets in India thereby improving market sentiments.
