States borrowing: RBI extends interim relaxation in WMA limits and OD regulations till March 2021

Both VMA limits and OD regulations benefit was meant to be available until September 30, 2020.

Sep 30, 2020 05:09 IST India Infoline News Service

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In the wake of Covid-19, the Reserve Bank of India (RBI) has further decided to relax the WMA limit and overdraft (OD) regulations for Indian states and union territories by another six months.

Due to the pandemic, RBI to provide comfort to state governments in undertaking COVID-19 containment and mitigation measures, and to enable them to plan their market borrowings, had announced an increase in WMA limit of the States/UTs by 60% over and above the level as on March 31, 2020.

Additionally, for giving further flexibility to state governments to tide over their cash flow mismatches, RBI relaxed the overdraft (OD) regulations as well.

In OD regulations, RBI increased 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.

Both VMA limits and OD regulations benefit was meant to be available until September 30, 2020.

However, on Tuesday, RBI said, on a review, it has been decided to extend the above-mentioned measures announced on April 17, 2020, and April 7, 2020, concerning increase in WMA Limits of States/UTs and OD regulations, respectively, for a further period of 6 months till March 31, 2021.

Meanwhile, all other stipulations remain unchanged.  

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