Reserve Bank of India and Bank of Japan have signed a Bilateral Swap Arrangement (BSA). It may be recalled that the BSA was negotiated between India and Japan during the visit of Prime Minister Narendra Modi to Tokyo in October last year. 

The BSA provides for India to access 75 billion US dollars whereas the earlier BSA had provided for 50 billion dollars. The BSA was approved by the Union Cabinet in January this year. The agreement for the BSA has become effective from today. India can access the agreed amount of 75 billion dollars for its domestic currency, for the purpose of maintaining an appropriate level of balance of payments or short-term liquidity. 

A part of the BSA can be accessed at the discretion of India. India has a comfortable level of foreign exchange reserves presently. The BSA provides India flexibility to use the reserves if at any point of time, in its judgment, there is a need to use the resources available under BSA.

The government of India has welcomed BSA effectiveness and expressed its gratitude to Japan for agreeing to enter into this arrangement. In a statement, the Ministry of Finance said, it is in the spirit of strong partnership and carries out its strategic partnership further. It said the financial cooperation would further enhance the strong economic ties between India and Japan.