RBI Extends Temporary Advances Limit of Rs 51,560 Crore for States, UTs Till September to Tide Over Covid Losses

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The Reserve Bank of India (RBI) headquarters in Mumbai. (AFP File)

The Reserve Bank of India (RBI) headquarters in Mumbai. (AFP File)

WMAs are momentary advances given by the RBI to the federal government to tide over any mismatch in receipts and funds.

  • PTI Mumbai
  • Last Updated:April 23, 2021, 19:46 IST
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The RBI on Friday mentioned the prevailing interim Ways and Means Advances (WMA) restrict of Rs 51,560 crore for all states and Union Territories will proceed up to September 30, 2021, because the impact of the COVID-19 pandemic remains to be prevalent. WMAs are momentary advances given by the RBI to the federal government to tide over any mismatch in receipts and funds.

The RBI mentioned it has revised the WMA Scheme of States and Union Territories (UTs) based mostly on the suggestions of the Advisory Committee on WMA to state governments. The WMA restrict arrived at by the Committee based mostly on whole expenditure of States/ UTs, works out to Rs 47,010 crore. “As the impact of the COVID-19 pandemic remains to be prevalent, the prevailing interim WMA restrict of Rs 51,560 crore for all States/ UTs shall proceed for six months i.e., up to September 30, 2021,” it said in a statement. The Reserve Bank will review the WMA limit thereafter, depending on the course of the pandemic and its impact on the economy, the central bank said.

It further said Special Drawing Facility (SDF) availed by state governments and UTs will continue to be linked to the quantum of their investments in marketable securities issued by the Government of India, including the Auction Treasury Bills (ATBs). The net annual incremental investments in Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) will continue to be eligible for availing of SDF, without any upper limit. CSF and GRF are reserve funds maintained by some State Governments with the Reserve Bank of India. “A uniform hair cut of 5 percent shall be applied on the market value of securities, for determining the operating limit of SDF on a daily basis,” the RBI mentioned.

The rate of interest on SDF, WMA, and Overdraft will proceed to be linked to the coverage fee (repo) of the Reserve Bank.

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