2) Ways and Means Advances Flashcards
1
Q
What are WMA ?
A
They are temporary loan facilities provided by RBI to the govt to enable it to meet temporary mismatches between revenue and expenditure
2
Q
Is it only for Central Govt ?
A
No even State Govts
3
Q
Interest payment by Govt ?
A
Yes obviously . It is same as Repo rate but for a tenure of 3 months
4
Q
Who decides the limits for WMA ?
A
RBI and Govt of India mutually
5
Q
When was this idea announced ?
A
In 1997
6
Q
What is the context now ?
A
Due to lockdown losses, RBI has decided to increase WMA by 30%
7
Q
What if Central Govt crosses the tenure ?
A
It is then called Overdraft. Overdraft is allowed at max for 10 days
8
Q
Interest rate during overdraft ?
A
2% greater than the repo rate (Repo + 2%)
