RBI extends the interim Ways and Means Advances of Rs 51,560 crore for states and UTs till Sep 30

Ways and Means Advances (WMA) are temporary advances made by the Reserve Bank to states and union territories to meet the shortfall in the receipts against the advances.

RBI said that the WMA scheme of states and union territories was extended on the recommendations of the Advisory Committee on WMA to state governments, which arrived at WMA limit of Rs 47,010 crore based on total expenditure of States/ UTs.

"As the effect of the COVID-19 pandemic is still prevalent, the existing interim WMA limit of Rs 51,560 crore for all States/ UTs shall continue for six months i.e., up to September 30, 2021," it said in a statement.

RBI said it will review the WMA thereafter and decide a future course of action depending on the pandemic situation and the state of the economy.

It further said that Special Drawing Facility (SDF) availed by the states and union territories will continue to be linked to their investment in marketable securities issued by the Central government, including the Auction Treasury Bills (ATBs).

The net annual incremental investments in Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) maintained by some states and UTs with the RBI will remain available for SDF without any upper limit. 

The interest rate on SDF, WMA and overdraft will continue to be linked to the policy rate (repo rate) of the Reserve Bank.