RBI Ups Financial Accommodation for States/UTs by 28% to ₹60,118 Crore

The Reserve Bank of India (RBI) has increased the aggregate Ways and Means Advances (WMA) limit for State governments and Union Territories (UTs) by 28%, from ₹47,010 crore to ₹60,118 crore, effective from July 1, 2024. This revision, based on recommendations by a Group of select State Finance Secretaries and considering recent expenditure data, aims to help States and UTs manage temporary mismatches in their cash flow.

WMA Types and Repayment

• Normal WMA: Clean advances repayable within three months.
• Special WMA: Secured advances against the pledge of Government of India dated securities.

Special Drawing Facility (SDF)

The SDF, linked to investments in marketable securities and Auction Treasury Bills (ATBs), will continue as per the existing framework. The maximum limit of SDF that can be availed against investments in the Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF) will be 50% of the lower value between the outstanding balance as of the last date of the second preceding quarter and the current balance in CSF/GRF.

SDF Limits for ATBs

For investments in ATBs, the SDF limit is set at 50% of the lower value between the outstanding balance in ATBs (91/182/364 days) as of the last date of the second preceding quarter and the current ATB balance.

Implementation and Review

This revision follows the RBI’s April 2022 review of SDF, WMA, and Overdraft (OD) schemes. Detailed State/UT-wise WMA limits are available on the RBI’s website.