Which section of the RBI Act provides Ways and Means Advances to the States Banking ........

Economic and social issues(Phase-I/II) Nature of Indian economy

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.

Which section of the RBI Act provides Ways and Means Advances to the States Banking?

Section 15(4)

Section 17(5)

Section 21

Section 21(7)

Section 19(2)

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Explanation:

Under Section 17(5) of RBI Act, 1934, the RBI provides Ways and Means Advances (WMA) to the States banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments.Such advances, are under the Act, '..repayable in each case not later than three months from the date of making that advance'. 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.