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The Reserve Bank of India has allowed a longer overdraft period for States and Union Territories (UTs) with immediate effect.
This facility to tide over the cashflow mismatches will be available till September.
States and Union Territories can now be in overdraft continuously for up to 21 working days against the earlier limit of 14 working days.
Further, the number of days States and UTs can be in overdraft in a quarter has been increased to 50 working days from the current 36.
The central bank provides financial accommodation to States and UTs to tide over temporary mismatches in the cashflow of their receipts and payments by way of an overdraft under a facility called Ways and Means Advances (WMA).
This is intended to provide a cushion to the government to carry on with its essential activities and normal financial operations.
This is the Reserve Bank’s latest move to deal with the pandemic. Earlier, it had increased the WMA limit by 30 per cent from the existing limit for all States and Union Territories, from April 1 to September 30.
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