RBI fixes WMA limit for states at Rs. 47010 crore.
What is the news:
- The limits for financial accommodation extended by the Reserve Bank of India to State Governments / Union Territories (UTs) through Ways and Means Advances (WMA), Special Drawing Facility (SDF) and Overdraft (OD) schemes were last reviewed and announcedin October 2021.
- Considering the uncertainties related to the ongoing pandemic, it was decided to continue with the higher WMA limit of ₹51,560 crore for all States, by a further period of six months i.e., up to March 31, 2022.
- On a review of the limits and keeping in view the gradual lifting of Covid-19 restrictions, it has been decided to revert to the WMA limits and timelines for OD for State Governments / UTs as recommended by the Advisory Committee on Ways and Means Advances to State Governments .
- These norms will be effective from April 01, 2022 and are subject to review.
Ways and Means Advances
- WMA are temporary advances given by the RBI to the government to tide over any mismatch in receipts and payments.
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- The WMA limit for State Governments/UTs will be ₹47,010 crore. State/UT-wise WMA limits are given in table:
| (Amount in ₹ crore) | ||
| Sl.No. | States/UTs | WMA Limit |
| 1 | 2 | 3 |
| 1 | Andhra Pradesh | 2,252.00 |
| 2 | Arunachal Pradesh | 285.00 |
| 3 | Assam | 1,243.00 |
| 4 | Bihar | 2,272.00 |
| 5 | Chhattisgarh | 1,056.00 |
| 6 | Goa | 203.00 |
| 7 | Gujarat | 2,518.00 |
| 8 | Haryana | 1,464.00 |
| 9 | Himachal Pradesh | 656.00 |
| 10 | Jammu and Kashmir | 1050.00 |
| 11 | Jharkhand | 1,067.00 |
| 12 | Karnataka | 3,137.00 |
| 13 | Kerala | 1,683.00 |
| 14 | Madhya Pradesh | 2,560.00 |
| 15 | Maharashtra | 4,686.00 |
| 16 | Manipur | 233.00 |
| 17 | Meghalaya | 209.00 |
| 18 | Mizoram | 191.00 |
| 19 | Nagaland | 245.00 |
| 20 | Odisha | 1,576.00 |
| 21 | Puducherry | 155.00 |
| 22 | Punjab | 1,104.00 |
| 23 | Rajasthan | 2,608.00 |
| 24 | Tamil Nadu | 3,601.00 |
| 25 | Telangana | 1,728.00 |
| 26 | Tripura | 304.00 |
| 27 | Uttar Pradesh | 5,680.00 |
| 28 | Uttarakhand | 602.00 |
| 29 | West Bengal | 2,641.00 |
| Total (All States/UTs) | 47,010.00 | |
Special Drawing Facility
- SDF availed by State Governments/ UTs shall continue to be linked to the quantum of their investments in marketable securities issued by the Government of India, including Auction Treasury Bills (ATBs). The net annual incremental investments in Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) shall continue to be eligible for availing of SDF, without any upper limit. A uniform hair cut of 5 per cent shall be applied on the market value of securities, for determining the operating limit of SDF on a daily basis.
Overdraft
Overdraft facility would be provided based on the following guidelines:
- State Governments/UTs can avail overdraft on 14 consecutive days;
- State Governments/UTs can be in OD for a maximum number of 36 days in a quarter;
- If the OD exceeds 100 per cent of the WMA limit for five consecutive working days for the first time in a financial year, Reserve Bank will advise the State to bring down the OD level within the 100 per cent of WMA limit. If, however, such irregularity occurs on a second or subsequent occasion in the financial year, the Reserve Bank will stop payments notwithstanding clauses (a) & (b) above.
Interest Rates on SDF, WMA and OD
Interest rate on SDF, WMA and OD shall continue to be linked to the policy rate of the Reserve Bank i.e., the Repo Rate. Interest will be charged for all the days the advance remains outstanding.
The prevailing rates are retained as given below:
| Scheme | Limit | Rate of Interest |
| SDF | If availed against net annual incremental investment in CSF and GRF | Repo rate minus 2 per cent |
| If availed against investment in G-sec/ ATBs | Repo rate minus 1 per cent | |
| WMA | If outstanding up to 3 months from the date of making the advance | Repo rate |
| If outstanding beyond three months from the date of making the advance | Repo rate plus 1 per cent | |
| OD | If availed up to 100 per cent of WMA limit | Repo rate plus 2 per cent |
| If it exceeds 100 per cent of WMA limit | Repo rate plus 5 per cent |
About RBI:
- The Reserve Bank of India(RBI) is India’s central bank and regulatory body and is responsible for the issue and supply of the Indian rupee and the regulation of the Indian banking system.
- It also manages the country’s main payment systems and works to promote its economic development.
- Established : 1 April 1935
- Governor: Shaktikanta Das
- Deputy governors (4): Rabi Sankar, M. Rajeshwar Rao, Dr. M. D. Patra, M. K. Jain
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