RBI Fixes WMA Limit for Centre at ₹50,000 Crore for H2 FY 2025-26

The Reserve Bank of India (RBI) has announced that the Ways and Means Advances (WMA) limit for the central government will be ₹50,000 crore for the second half of FY 2025-26.

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What are WMAs?

• Definition: WMAs are temporary advances provided by the RBI to the Central and State Governments, and Union Territories to manage short-term mismatches in receipts and payments.
• Repayment: As per the agreement, WMAs must be fully paid off within three months from the date of issue.
• Fiscal Deficit: Unlike ad hoc Treasury Bills, WMAs are not a tool to finance the fiscal deficit.

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Interest Rates and Overdraft

• The interest rate on WMAs will be linked to the prevailing repo rate.
• In case of an overdraft, the rate will be 2% above the repo rate.

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Safeguard Mechanism

When 75% of the WMA limit is utilised, the RBI will trigger fresh floatation of Government Securities, ensuring disciplined borrowing and liquidity management.