The Maldives has fully repaid a USD 150 million Treasury bill facility extended by India. The final USD 50 million tranche was settled on 17 September 2026. The State Bank of India (SBI) had subscribed to these Maldivian Treasury bills in 2019, and the facility was extended six times. The Ministry of External Affairs said the Government of India bore the interest on all these bills over the past five years. The story matters for exams because it shows India's financial support to a key Indian Ocean neighbour under the Neighbourhood First policy.
The Maldives completed repayment of a USD 150 million Treasury bill facility to India. The last USD 50 million was paid on 17 September 2026. On 18 September 2026, MEA Spokesperson Randhir Jaiswal said the Government of India had borne the interest on all these bills for five years. India's other support to the Maldives continues.
The full repayment in 2026 closes this chapter, while newer support tools continue.
Small island economies often depend on bilateral lenders for liquidity. India's support stands out because the interest was borne by the lender itself. No verified cross-country rank applies here, so the comparison is qualitative.
Core Concept: Neighbourhood First Policy and Financial Diplomacy
Q1. What was the total size of the Treasury bill facility the Maldives fully repaid to India in September 2026? [Easy]
A) USD 50 million
B) USD 100 million
C) USD 150 million
D) USD 350 million
Answer: C
Explanation: The Maldives repaid the full USD 150 million facility, with the final USD 50 million on 17 September 2026.
Q2. Which bank subscribed to the Maldivian Treasury bills? [Easy]
A) Reserve Bank of India
B) State Bank of India
C) Exim Bank of India
D) Bank of Baroda
Answer: B
Explanation: The State Bank of India subscribed to the bills in 2019.
Q3. How many times was the Treasury bill facility extended? [Moderate]
A) Six
B) Three
C) Four
D) Five
Answer: A
Explanation: The facility was extended six times to support Maldivian finances.
Q4. On which date did the Maldives settle the final tranche? [Moderate]
A) 11 May 2026
B) 18 September 2026
C) 1 January 2024
D) 17 September 2026
Answer: D
Explanation: The final USD 50 million tranche was settled on 17 September 2026.
Q5. Who bore the interest on the USD 150 million Treasury bills over five years? [Moderate]
A) The Government of the Maldives
B) The Asian Development Bank
C) The Government of India
D) The International Monetary Fund
Answer: C
Explanation: The MEA said the Government of India bore the interest on all the bills.
Q6. Which of the following remains an ongoing Indian support mechanism for the Maldives after this repayment? [Tricky]
A) An INR 30 billion currency swap facility
B) A USD 150 million Treasury bill facility
C) A USD 45 million grant for defence purchases
D) A USD 50 million loan due in January 2024
Answer: A
Explanation: The INR 30 billion currency swap continues; the USD 150 million bill facility is now fully repaid.
Q7. SBI's USD 350 million subscription to Maldivian Treasury bonds matures in: [Tricky]
A) 2026-2027
B) 2029-2030
C) 2024-2025
D) 2035-2036
Answer: B
Explanation: The USD 350 million Treasury bonds mature in 2029-2030.
Q8. A Treasury bill is best described as: [Tricky]
A) A long-term government bond of 10 years or more
B) A corporate equity share
C) A foreign currency deposit
D) A short-term government debt instrument with maturity under one year
Answer: D
Explanation: Treasury bills are short-term government debt with maturity under one year, unlike long-term bonds.
PYQ 1:
Who announced that the Government of India bore the interest on the Maldivian Treasury bills?
A) The Governor of the Reserve Bank of India
B) The Chairman of SBI
C) The Union Finance Minister
D) MEA Spokesperson Randhir Jaiswal
Answer: D
Explanation: MEA Spokesperson Randhir Jaiswal made the statement on 18 September 2026.
PYQ 2:
Consider the following statements:
The Maldives repaid the USD 150 million facility in three tranches of USD 50 million each.
The first tranche was repaid in January 2024.
The Treasury bill facility was extended ten times.
Which of the above statements is/are correct?
A) 1 only
B) 1 and 2 only
C) 2 and 3 only
D) All of the above
Answer: B
Explanation: Statements 1 and 2 are correct; the facility was extended six times, not ten.
PYQ 3:
Match the following:
| List I | List II | | --- | --- | | P. USD 150 million | 1. Currency swap facility | | Q. INR 30 billion | 2. Treasury bonds maturing 2029-2030 | | R. USD 350 million | 3. Treasury bill facility now repaid | | S. USD 45 million | 4. Interest borne by India |
A) P-3, Q-1, R-2, S-4
B) P-1, Q-3, R-2, S-4
C) P-3, Q-2, R-1, S-4
D) P-2, Q-1, R-3, S-4
Answer: A
Explanation: USD 150 million was the bill facility, INR 30 billion is the swap, USD 350 million are bonds, and USD 45 million was the interest India bore.
Question 1 (150 words): What does the Maldives' repayment of the USD 150 million Treasury bill facility reveal about India's financial diplomacy?
The repayment shows that India's financial diplomacy with the Maldives rests on patient, low-cost support rather than hard lending.
SBI subscribed to Maldivian Treasury bills in 2019. Instead of demanding repayment, India extended the facility six times. The Government of India also bore the interest for five years, which the MEA put at USD 45 million. The Maldives repaid in three tranches, the last on 17 September 2026.
India has also kept a safety net in place: an INR 30 billion currency swap and USD 350 million in Treasury bonds maturing in 2029-2030. This mix builds trust and gives a small island economy breathing room.
Going forward, India should pair such support with projects that build the Maldives' own fiscal strength, so that goodwill turns into lasting partnership.
Question 2 (250 words): Discuss the importance of the Maldives in India's Indian Ocean strategy, with reference to India's recent economic engagement.
The Maldives matters to India because it sits close to India's west coast and to key Indian Ocean shipping routes, making it central to India's maritime security.
India's approach rests on Neighbourhood First and on the SAGAR vision of 2015, broadened as Vision MAHASAGAR in 2025. Both treat neighbours' stability as part of India's own security.
Economic engagement has been the main tool. SBI subscribed to Maldivian Treasury bills from 2019 and rolled them over six times. The Government of India bore USD 45 million in interest. The Maldives repaid the USD 150 million in three tranches, completing it on 17 September 2026. India also provides an INR 30 billion currency swap and holds USD 350 million in Treasury bonds. In July 2025, the two sides signed 6 MoUs and India extended a ₹4,850 crore line of credit. RuPay payments were introduced in the Maldives in October 2024.
There are challenges. Small island economies have limited foreign-exchange buffers, and repayment pressure can strain them. Political shifts in a partner country can also change the tone of ties, so India's support must stay timely and visible.
India should continue flexible financial support, speed up people-centric projects, and expand rupee-based trade. A stable, prosperous Maldives is the best guarantee of a secure western Indian Ocean for India.