The Reserve Bank of India (RBI) on Wednesday set the Ways and Means Advances (WMA) limit at Rs 1.2 lakh crore for the central government for the first half of the financial year beginning April 1.
WMAs are temporary advances given by the RBI to the government to tide over any mismatch in receipts and payments.
“It has been decided, in consultation with the Government of India, that the limits for Ways and Means Advances (WMA) for the first half of the financial year 2021-22 (April 2021 to September 2021) will be Rs 1,20,000 crore,” the central bank said in a statement.
Further, the RBI said it may trigger fresh floatation of market loans when the government utilises 75 per cent of the WMA limit.
“The Reserve Bank retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances,” it added.
The interest rate on WMA is equal to the repo rate and on overdraft, it is two per cent above the repo rate. The current repo rate is 4 per cent.