The aggregate ways and means advances (WMA) limit for State governments/ Union Territories (UTs) has been upped to ₹60,118 crore against the existing limit of ₹47,010 crore.

The upward revision in WMA, which takes into account the expenditure data of the States for the recent years, is based on the recommendations made by the Group constituted by RBI and consisting of select State Finance Secretaries. The revised WMA limit is effective from July 1.

The RBI provides WMA (or financial accommodation) to the States banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments.

Such advances, are repayable in each case not later than three months from the date of making that advance.

There are two types of WMA – normal and special. While normal WMA are clean advances, special WMA are secured advances provided against the pledge of Government of India dated securities.

Also read
Getty Images/iStockphoto

After 22 months, Centre registers fiscal surplus in May

Special Drawing Facility

The RBI said SDF availed by State Governments/ UTs will continue to be linked to the quantum of their investments in marketable securities, issued by the Government, including Auction Treasury Bills (ATBs).

Based on the recommendations made by RBI working group on consolidated sinking fund (CSF) and guarantee redemption fund (GRF), the maximum limit of SDF that can be availed by States / UTs against the investments held under CSF/ GRF will be 50 per cent of the lower of (i) outstanding balance of the funds as on the last date of the second preceding quarter, and (ii) the current balance held in CSF/ GRF.

For investments held in ATBs, the maximum limit of SDF will be 50 per cent of the lower of (i) outstanding balance in ATBs (91/182/364 days) as on the last date of the second preceding quarter, and (ii) the current ATB balance.

Related Topics