Source: TH
Context: The Reserve Bank of India (RBI) has increased the Ways and Means Advances (WMA) limits for State governments and Union territories by 28%.
About Ways and Means Advances (WMA):
- Introduced in 1997 to address mismatches in government receipts and payments.
- Governments can obtain immediate cash from the RBI, repayable within 90 days, with interest at the existing repo rate.
- Legal Authority: Authorized under Section 17(5) of the RBI Act, 1934.
- If WMA exceeds 90 days, it becomes an overdraft, with interest 2 percentage points higher than the repo rate.
