రాష్ట్రాలకు ఇచ్చే Ways And Means Advances అంటే ఏంటి? || All About Ways And Means Advances ||
As a part of its Stimulus 2.0 to deepen the availability of credit, India’s Central bank recently announced an increase in the Ways and Means Advances (WMA) limits to States. For the first half of FY21, WMA limit of States has been increased by 60 per cent over the level as on March 31, 2020.
What is it?
When managing money, we know that cash outflows often overshoot inflows. When businesses face this, they approach banks to get working capital loans. But State governments in India either go for market borrowings by issuing securities or seek short-term funding from the RBI.
WMA is a mechanism used by the RBI to fund States to help them to tide over temporary mismatches in cash flows. Borrowings through WMA are to be repaid within three months and usually offered at the repo rate.
There are two types of WMAs — normal Ways and Means Advances; and Special Drawing Facilities against government securities held by States as collateral. Any amount drawn by a State in excess of the normal WMA is an overdraft.
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రాష్ట్రాలకు ఇచ్చే Ways And Means Advances అంటే ఏంటి? || All About Ways And Means Advances || As a part of its Stimulus 2.0 to deepen the availability of credit, India’s Central bank recently announced an increase in the Ways and Means Advances (WMA) limits to States. For the first half of FY21, WMA limit of States has been increased by 60 per cent over the level as on March 31, 2020. What is it? When managing money, we know that cash outflows often overshoot inflows. When businesses face this, they approach banks to get working capital loans. But State governments in India either go for market borrowings by issuing securities or seek short-term funding from the RBI. WMA is a mechanism used by the RBI to fund States to help them to tide over temporary mismatches in cash flows. Borrowings through WMA are to be repaid within three months and usually offered at the repo rate. There are two types of WMAs — normal Ways and Means Advances; and Special Drawing Facilities against government securities held by States as collateral. Any amount drawn by a State in excess of the normal WMA is an overdraft.