RBI extends Ways and Means credit for States

The Reserve Bank of India (RBI) decided to continue with the existing interim Ways and Means Advances (WMA) scheme limit of ₹51,560 crore for all States/ UTs shall for six months i.e., up to September 30, given the prevalence of COVID-19.

Daily Current Affairs Quiz 2021

Ways and means advances (WMA) is a mechanism used by Reserve Bank of India (RBI) under its credit policy to provide to States, banking with it, to help them tide over temporary mismatches in the cash flow of their receipts and payments. This is guided under Section 17(5) of RBI Act, 1934.

Based on the recommendations of the Advisory Committee on WMA to State Governments, 2021 (chaired by Sudhir Shrivastava) the RBI had revised the WMA Scheme of States and Union Territories (UTs).

The WMA limit arrived at by the Committee based on total expenditure of States/ UTs, works out to ₹47,010 crore. The RBI said it would review the WMA limit thereafter, depending on the course of the pandemic and its impact on the economy.

The Special Drawing Facility availed by State Governments/ UTs shall continue to be linked to the quantum of their investments in marketable securities issued by the Government of India, including the Auction Treasury Bills.