Along with its raft of measures to cut the Gordion knot tied up by the Covid-19 pandemic and to help improve the overall liquidity and credit flows in the system, the Reserve Bank of India on Friday also took another important measure of increasing the ways and means advances (WMA) limit of states.
The move is expected to provide greater comfort to the states for undertaking COVID-19 containment and mitigation efforts, and to plan their market borrowing programmes better.
Announcing the measures, RBI governor Shaktikanta Das said WMA limit of states is being increased by 30 per cent. So the WMA limit of states increase by 60 per cent over and above the level as on March 31, 2020. The increased limit will be available till September 30, 2020, Das said.
Ways and means advances (WMA) is a mechanism used by RBI under its credit policy to provide to States, banking with it, to help them 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 that advance”.
