The Reserve Bank has set the ways and means advances (WMA) limit for the central government at Rs 20,000 crore for the second half of the current fiscal.
"It has been decided, in consultation with the Government of India, that the limit for Ways and Means Advances (WMA) for the second half of the financial year 2015-16 (October 2015 - March 2016) will be Rs 20,000 crore," RBI said in a release.
The interest rate on WMA/overdraft will be 2 per cent above the repo rate, the central bank said.
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As per the provisions of the agreement dated March 26, 1997 between the Government of India and the Reserve Bank of India, overdrafts beyond ten consecutive working days will not be allowed, RBI further said.
RBI provides WMA to the States banking with it to help them tide over temporary mismatches in cash flow of their receipts and payments.
Such advances, are to be repaid not later than three months from the date of making that advance.