Context:

• India has approved financial assistance of ₹30 billion to the Maldives under the ‘SAARC Swap Arrangement’.

Key Points:

• Announcement: Made on April 24, 2026, by the Indian High Commission in Malé
• This assistance highlights strong economic ties between India and the Maldives and reflects India’s Neighbourhood First policy

Institutional Framework:

• The drawdown has been provided under the Framework on Currency Swap Arrangement for SAARC Countries (2024–2027)
• The agreement was signed between the Reserve Bank of India and the Maldives Monetary Authority (MMA) during Maldivian President Mohamed Muizzu’s visit to New Delhi in October 2024

INR Swap Window:

• The ₹30 billion assistance has been provided specifically under the INR Swap Window
• The revised framework (2024–27) includes concessional terms to promote transactions in Indian Rupee (INR)

Objective:

• To support Maldives in maintaining economic stability and meeting liquidity needs during foreign exchange shortages

Previous Repayment:

• On the same day of approval, Maldives repaid a USD 400 million swap facility taken in October 2024
• India continues to act as a first responder for Maldives in times of crisis
• The assistance aligns with India’s Neighbourhood First Policy and Vision MAHASAGAR
• Since 2012, RBI has provided over USD 1.1 billion in swap assistance to Maldives
• The Indian High Commission stated that the swap arrangement plays a crucial role in ensuring Maldives’ financial stability, especially during external economic pressures

Economic Diplomacy:

This move also aims to balance growing economic influence of external powers like China and strengthen India’s strategic position in South Asia

SAARC Currency Swap Arrangement:

• An important initiative by the Reserve Bank of India to ensure financial stability in South Asia

Objective:

To provide immediate funding support (backstop line) to SAARC countries during short-term foreign exchange liquidity needs or Balance of Payments crises

Launch & Update:

First operationalized on November 15, 2012; revised framework introduced for 2024–2027

Total Corpus:

USD 2 billion overall limit

Revised Framework (2024–27):

• INR Swap Window: Separate ₹250 billion window with concessional terms
• USD/Euro Window: USD 2 billion facility continues
• Eligibility: Available to all SAARC members subject to bilateral agreements
• Part of India’s Neighbourhood First and Vision MAHASAGAR

SAARC (South Asian Association for Regional Cooperation):

• Established: December 8, 1985, with signing of the SAARC Charter in Dhaka
• Secretariat: Kathmandu, Nepal
• Founding Members (7): Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan, Sri Lanka
• Members (8): India, Pakistan, Bangladesh, Sri Lanka, Nepal, Bhutan, Maldives, Afghanistan (joined in 2007)
• Observers (9): Australia, China, EU, Iran, Japan, Mauritius, Myanmar, South Korea, USA

Objectives:

• Promote welfare of people in South Asia
• Accelerate economic growth, social progress, and cultural development
• Strengthen collective self-reliance

Key Initiatives:

• SAFTA (Free Trade Area) – 2006
• SAARC Development Fund (SDF)
• South Asian University (New Delhi)
• SAARC Disaster Management Centre

Maldives:

• An important island nation in the Indian Ocean
• Location: About 700 km southwest of Lakshadweep (India)
• Structure: 1,192 islands across 26 coral atolls
• Capital: Malé (one of the most densely populated cities)
• Religion & Language: Islam (state religion), Dhivehi (official language)
• Economy: Tourism and fisheries-based

Important Channels:

• Eight Degree Channel: Separates Maldives from Lakshadweep (Minicoy Island)
• One-and-a-half Degree Channel: Divides northern and southern atolls

India–Maldives Relations:

• Historical: India was among the first to recognize Maldives (1965)
• Strategic Importance:

Located near major Sea Lines of Communication (SLOCs) in the Indian Ocean

Security Cooperation:

• Operation Cactus (1988): India foiled a coup attempt in Maldives
• Exercises: Ekuverin, Dosti, Ekatha

Economic & Development Cooperation:

• India is a major trade partner (2023)
• Infrastructure support includes Hanimaadhoo Airport & Greater Malé Connectivity Project (via Line of Credit)