India has extended over USD 1 billion in financial relief by renewing the remaining dues under a Special Swap Arrangement between the Reserve Bank of India (RBI) and the Central Bank of Sri Lanka (CBSL), according to sources familiar with the matter.
Sources said the outstanding dues, part of a broader USD 4 billion support extended by India at the peak of Sri Lanka’s economic crisis, were scheduled to mature in October 2024. Around USD 2.6 billion of this was under a Special Swap Arrangement, including bilateral dues and Asian Clearing Union settlements.
Taking into account Sri Lanka’s fragile recovery and upcoming IMF engagements, the RBI proactively extended the facility in October 2024 without requiring formal diplomatic engagement between the two governments, sources noted.
During Indian Prime Minister Narendra Modi’s State Visit to Sri Lanka in April 2025, the Sri Lankan government had requested a further extension with a reduced interest rate. According to sources, Modi agreed to the request during high-level discussions.
Last week, on July 3, an RBI delegation was in Colombo to formalize the extension, which includes a reduction in the applicable interest rate. Sources said the move is aimed at bolstering Sri Lanka’s economic stabilization efforts and represents a key gesture of India’s continued support.
This latest relief covers dues exceeding USD 1 billion, sources said. With Sri Lanka’s gross official reserves hovering around USD 6 billion—of which a portion remains restricted due to Chinese terms—India’s timely extension is seen as critical.
According to sources, India’s total assistance to Sri Lanka since the onset of the economic crisis exceeds USD 7 billion, including more than USD 800 million in grants.
In a separate development, sources added that nearly USD 100 million worth of earlier Indian credit lines have now been converted into standard loans. (Newswire)
