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RBI, in consultation with Government of India, has decided that limits for Ways & Means Advances (WMA) for H1 of FY 2019-20 (April to September 2019) will be Rs 75000 crore.Under the WMA system, the Reserve Bank extends short-term advances up to the pre-announced half- yearly limits, fully payable within three months.Interest rate for WMA is currently charged at the repo rate.WMA is a mechanism used by the RBI to fund States to help them to tide over temporary mismatches in cash flows.The interest levied for special WMAs could be lower than the repo rate due to the backing of government securities.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. The operative limit for special WMA for a state is subject to its holdings of central government dated securities up to a maximum of limit sanctioned. In addition, the RBI has determined limits for normal and special WMA for each state as multiples of the prescribed minimum balance required to be maintained with the RBI by that state. These limits have been revised periodically.
What WMA limit has been fixed for the year April-September, 2020-2021?
85000 crore
75000 crore
200000 crore
120000 crore
83000 crore
The WMA limit during the first half of 2020-21 (April-September) has been fixed at Rs 120,000 crore. This is 60% higher than the Rs 75,000 crore limit for the same period of 2019-20. The limit for the second half of the last fiscal (October-March) was Rs 35,000 crore. The higher limit will be valid till September 30.The central bank, on April 7, also extended the period for which a state can be in overdraft from 14 to 21 consecutive working days, and from 36 to 50 working days during a quarter.
By: Himani Bihagra ProfileResourcesReport error
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