Published: 3 March 2026RBI / Business StandardEconomy
RBI and Bank of Japan Renew $75 Billion Bilateral Swap Arrangement, Effective February 28, 2026
Around March 4, 2026, the Reserve Bank of India (RBI) and the Bank of Japan (BoJ) renewed their Bilateral Swap Arrangement (BSA) for USD 75 billion, effective February 28, 2026. This arrangement allows both central banks to swap their domestic currencies for US dollars up to the agreed limit, providing a liquidity safety net during periods of financial stress.
Bilateral Swap Arrangements are financial safety nets that enable countries to access foreign exchange liquidity without depleting their own reserves. The India-Japan BSA, first established in 2018 and periodically renewed, reflects the deepening strategic and financial partnership between the two nations. Japan is one of India's largest bilateral development finance partners, and the BSA complements this relationship at the monetary level.
For India, maintaining such arrangements strengthens external sector resilience and signals confidence in the rupee to international markets. The BSA is consistent with India's foreign exchange reserve management strategy and its membership in the Chiang Mai Initiative Multilateralisation (CMIM) framework within ASEAN+3. For Rajasthan, which is a major destination of Japanese FDI and tourism, the India-Japan financial relationship has indirect economic implications for investment and trade.
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Practice MCQ from this story
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Linked questionEasy
Which category does the development regarding RBI and Bank of Japan renewing the $75 billion bilateral swap arrangement primarily fall under?
Explanation · Correct answer AThe renewal of the India-Japan Bilateral Swap Arrangement is an economy-and-trade development because it concerns a two-way currency swap facility between the two monetary authorities. The arrangement remained up to $75 billion and became effective from February 28, 2026.
Frequently asked questions
What is the value and effective date of the Bilateral Swap Arrangement renewed between RBI and Bank of Japan?
The RBI and Bank of Japan renewed their Bilateral Swap Arrangement (BSA) for $75 billion, effective February 28, 2026.
What is the purpose of the Bilateral Swap Arrangement (BSA) between India and Japan?
The BSA enables both central banks to swap their domestic currencies for US dollars during periods of financial stress, acting as a financial safety net against currency volatility.
What is India's bilateral trade volume with Japan, and what role does Japan play in India's development?
India-Japan bilateral trade exceeds $20 billion. Japan is a major investor in India's infrastructure and the two countries share a deep strategic and monetary partnership.
How does India's foreign exchange reserve level relate to the RBI-Bank of Japan swap arrangement?
India's foreign exchange reserves exceed $600 billion, managed by the RBI for currency stabilisation. The BSA provides an additional safety net by allowing quick access to US dollars via currency swaps when needed.
Under which broader frameworks does India operate its currency swap arrangements?
India's currency swap arrangements operate both under the SAARC framework and through bilateral deals. The RBI-Bank of Japan BSA is one such bilateral arrangement in India's wider currency swap network.
