The Reserve Financial institution of India (RBI) has determined to increase the interim leisure in WMA (Methods and Means Advances) limits and OD (overdraft) laws for States/ Union Territories (UTs) for one more six months until March 31, 2021.
Each these relaxations, that are aimed toward serving to States/UTs overcome short-term liquidity mismatches, are at present out there until September 30, 2020. Underneath WMA, States/ UTs get short-term credit score as much as three months from the RBI to bridge non permanent mismatches in money flows.
On April 17, the RBI had introduced a rise in WMA restrict of the States/UTs by 60 per cent over and above the extent as on March 31.
This was carried out to offer better consolation to them for endeavor Covid-19 containment and mitigation measures and to allow them to plan their market borrowings.
Additional, to be able to present flexibility to State governments to tide over their money circulate mismatches, the OD laws have been relaxed with impact from April 7.
Underneath the OD leisure, the variety of days for which a State/ UT may be in overdraft repeatedly was elevated to 21 working days from 14 working days; and the variety of days for which a State/ UT may be in overdraft in 1 / 4 was elevated to 50 working days from 36 working days.
The rate of interest on WMA is the Repo price (four per cent).
For OD as much as 100 per cent of WMA restrict, the rate of interest is 2 per cent above the Repo price. For OD exceeding 100 per cent of the WMA restrict, the rate of interest is 5 per cent above the Repo price.