RBI’s Measures to Fight Economic Disruptions

The Reserve Bank of India (RBI) has extended the realisation period of export proceeds and Ways and Means Advance (WMA) limit of state governments. Further, the central bank has provided relief to the banking sector’s capital requirements. These steps have been taken to cushion the economic impact of the coronavirus pandemic and lockdown. These steps have come after the RBI recently cut repo rate by 75 basis points.

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RBI has formed an advisory committee to review the Ways and Means limit for State governments and Union Territories. Till the panel submits its report, the RBI has increased the Ways and Means advances limit by 30% for States and union territories. The revised limits will come into force with effect from April 1, 2020 and will be valid till September 30, 2020. Recently, the Central Government has hiked Ways and Means Advance (WMA) limit with the Reserve Bank of India (RBI) by 60%.