To help Centre tide over temporary mismatches in the cash flow of receipts and payments, the RBI today said the limit for Ways and Means Advances (WMA) for the first half of 2016-17 will be Rs 50,000 crore.
"The Reserve Bank may trigger fresh flotation of market loans when the Government of India utilises 75 per cent of the WMA limit," the central bank said in a statement.
RBI retains the flexibility to revise the limit at any time, in consultation with the Government of India, taking into consideration the prevailing circumstances.
The interest rate on WMA is equal to the repo rate while for overdraft it is two per cent above the repo rate.
The minimum balance required to be maintained by the Government with the RBI will not be less than Rs 100 crore on Fridays, on the date of closure of Government's financial year and on June 30, the closure of the annual accounts of the RBI. It should not less than Rs 10 crore on other days.
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.
The WMA limit for the second half of the financial year 2016-17 will be fixed in September 2016, the RBI said.
RBI provides WMA to the States banking with it to help them to tide over temporary mismatches in the cash flow of their receipts and payments.
