RBI lowers limit for ways and means advances for States to ₹47,010 cr.

In view of improvement in the pandemic situation, the Reserve Bank on Friday decided to reduce the Ways and Means Advances (WMA) for States and Union Territories (UTs) to ₹47,010 crore from ₹51,560 crore.

WMA are temporary advances given by the RBI to the government to tide over any mismatch in receipts and payments.

Considering the uncertainties related to COVID-19, the RBI had raised the WMA limit to ₹51,560 crore for all States. The higher WMA was applicable till March 31, 2022.

On a review of the limits and keeping in view the gradual lifting of COVID-19 restrictions, RBI said it had been decided to revert to the WMA limits and timelines for Over Draft (OD) for State governments / UTs as recommended by the Advisory Committee on Ways and Means Advances to State Governments.

These norms will be effective from April 1, 2022 and are subject to review.

The RBI further said the Special Drawing Facility (SDF) availed of by State governments/ UTs would continue to be linked to the quantum of their investments in marketable securities issued by the Government of India, including Auction Treasury Bills (ATBs).

The interest rates on SDF, WMA and OD shall continue to be linked to the policy rate of the Reserve Bank - the repo rate.

Interest will be charged for all the days the advance remains outstanding, the central bank added.

The limit for WMA for the Government of India for the first half of the financial year FY23 has been set at ₹1,50,000 crore.

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Printable version | Apr 1, 2022 10:06:49 pm |