Moneycontrol
Jan 30, 2016 12:37 PM IST | Source: PTI

RBI increases WMA for states to Rs 32,225 crore

WMA are intended to provide a cushion to the states to carry on their essential activities and normal financial operations. The Reserve Bank, as banker to the state governments, provides financial accommodation to states to tide over temporary mismatches in the cash flow of their receipts and payments.


The RBI has increased the Ways and Means Advances (WMA) for all states to Rs 32,225 crore from the earlier Rs 15,360 crore for the current and next financial years.

WMA are intended to provide a cushion to the states to carry on their essential activities and normal financial operations. The Reserve Bank, as banker to the state governments, provides financial accommodation to states to tide over temporary mismatches in the cash flow of their receipts and payments.


Based on the recommendations of the Advisory Committee on WMA Scheme for the State Governments, the Reserve Bank of India has revised the scheme.

"The facility of availing of SDF (Special Drawing Facility) continues to be linked to the quantum of investments in the government of India securities including Auction Treasury Bills (ATBs). The SDF will be available before availing of WMA," it said in a statement today.


It further said that as the Repo rate is the policy rate, the interest rate on SDF and WMA will continue to be linked with the Repo rate. The interest will be charged for all the days of outstanding of SDF/WMA, the RBI said.

There is no change in the existing Overdraft Regulation Scheme and a state can be in overdraft for 14 consecutive working days.


The revised limits will be implemented effective from February 1, 2016. These limits would continue for two years. A review will be undertaken by the RBI in 2017-18 when final expenditure numbers for FY 2015-16 will be available.

When the advances to the State Governments exceed their SDF and WMA limits, Overdraft (OD) facility is provided. 

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