RBI announces extension of Interim Relaxation in WMA limits and OD regulations

The Reserve Bank of India (RBI), announced the extension of the existing limit in Ways and Means Advances (WMA) limits and OD regulations for a further period of 6 months till March 31, 2021. The extension is available for all States/UTs to enable them to tide over the situation arising from the outbreak of the COVID-19 pandemic.  Earlier, RBI had announced an increase in the WMA limit of the States/UTs to Rs.2 lakh Crore (by 60% over and above the level as of March 31, 2020), vide its press release dated April 17, 2020. The revised limit was valid until September 30, 2020.  The extension of the time limit till March 31, 2021, comes in the wake of expectation that the Central government will step up expenditure on the social sector, including health and sanitation, following the outbreak of the pandemic.

Further, in order to provide flexibility to State Governments to tide over their cash flow mismatches, the overdraft (OD) regulations were relaxed, with effect from April 7, 2020, wherein it was decided to (a) increase the number of days for which a State/ UT can be in overdraft continuously to 21 working days from 14 working days, and (b) the number of days for which a State/ UT can be in overdraft in a quarter to 50 working days from 36 working days.