WMA
- September 30, 2020
- Posted by: OptimizeIAS Team
- Category: DPN Topics
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Subject: Economy
Context:
The Reserve Bank of India (RBI) has decided to extend the interim relaxation in WMA (Ways and Means Advances) limits for States/ Union Territories (UTs) for another six months till March 31, 2021.
Concept:
- On April 17, the RBI had announced an increase in WMA limit of the States/UTs by 60 per cent over and above the level as on March 31.
- The WMA facility enables the government to take a temporary short term loan from the central bank, mainly to address the mismatch between its inflow of revenues and outflow of expenditure.
- A higher limit provides the government flexibility to raise funds from RBI without borrowing them from the market.
- 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