When RBI provides Ways and Means Advances (WMA) to the state governments against collateral Government Securities; it is called?

When RBI provides Ways and Means Advances (WMA) to the state governments against collateral Government Securities; it is called?
[A]Normal WMA
[B]Special WMA
[C]Statutory WMA
[D]None of them

Special WMA
If there is a temporary mismatch in the cash flow of the receipts & payments of the State Government then Ways and means advances (WMA) facility is used by RBI to handle the mismatch for a period of 90 days. There are two types of WMA – normal and special. If the state government takes WMA against the collateral Government securities then it is called Special WMA. If they are not against the security, then they are provided WMA based upon the 3-year average of actual revenue and capital expenditure of the state then it is called normal WMA.

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Comments

  • sona
    Reply

    ways and means advances are granted to both state and central govt.