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RBI extends interim relaxation in WMA limits and OD regulations

RBI extends interim relaxation in WMA limits and OD regulations

RBI extends interim relaxation in WMA limits and OD regulations
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By CNBC-TV18 Sept 29, 2020 6:32:24 PM IST (Updated)

The RBI has extended interim relaxation in Ways and Means Advances (WMA) limits and OD regulations with a view to provide greater comfort to state governments in undertaking COVID-19 containment and mitigation measures, and to enable them to plan their market borrowings.

The RBI has extended interim relaxation in Ways and Means Advances (WMA) limits and OD regulations with a view to provide greater comfort to state governments in undertaking COVID-19 containment and mitigation measures, and to enable them to plan their market borrowings.

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The apex bank had announced an increase in WMA limit of the states/UTs by 60 percent over and above as of March 31, 2020, an official statement issued on April 17 stated.
WMA is a facility for Centre and states to borrow from the RBI meant to help them tide over temporary mismatches in cash flows of their receipts and expenditures.
Further, in order to provide flexibility to state governments to tide over their cash flow mismatches, overdraft (OD) regulations were relaxed, with effect from April 7, 2020, “wherein it was decided to (a) increase the number of days for which a State/ UT can be in overdraft continuously to 21 working days from 14 working days; and (b) the number of days for which a State/ UT can be in overdraft in a quarter to 50 working days from 36 working days.”
Both these relaxations are currently available till September 30, 2020. The RBI has decided to extend the above mentioned measures announced on April 17, 2020, and April 7, 2020, with regard to increase in WMA limits of states/UTs and OD regulations, respectively, for a further period of 6 months till March 31, 2021. All other stipulations remain unchanged.
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