RBI sets Ways and Means Advances (WMA) limit at Rs 50K cr
Mumbai: India’s Reserve Bank on Monday said that Rs 50,000 crore has been set as the ‘Ways and Means Advances’ (WMA) limit for the Central government during the H2FY22.
In financial parlance, the WMA is a mechanism used by the RBI, under its credit policy, to provide advances to states banking with it, to tide over temporary mismatches in the cash flow of their receipts and payments.
This is repayable in each case, not later than three months from the date of making the advance.
“It has been decided, in consultation with the Government of India, that the limit for ‘Ways and Means Advances’ (WMA) for the second half of the financial year 2021-22 (October 2021 to March 2022) be fixed at Rs 50,000 crore.
“The Reserve Bank may trigger fresh floatation of market loans when the Government of India utilises 75 per cent of the WMA limit.”
According to the statement, the Reserve Bank retains the flexibility to revise the limit at any time, in consultation with the Centre taking into consideration the prevailing circumstances.