Skip to main content

What is Ways and Means Advances (WMA)?

Reserve Bank of India (RBI) has recently announced the Ways and Means Advances (WMA) limit for the Government of India. So, what is WMA?

What is Ways and Means Advances (WMA)?

Ways and Means Advances (WMA) is a collateral free clean advance availed by the Central and State Governments from RBI, to tide over temporary mismatches in the receipts and payments.

Section 17(5) of the Reserve Bank of India Act, 1934 empowers RBI to grant WMA to Central and State Governments, as and when required by them.

What is Special WMA / Special Drawing Facility (SDF)?

In addition to WMA, State Governments are also eligible for a Special Drawing Facility (SDF), which is granted against collateral of Government Securities held by the State Governments. 

SDF availed by State Governments / UTs is linked to the quantum of their investments in marketable securities issued by the Government of India, including Auction Treasury Bills (ATBs). 

(Updated on June 28, 2024)

Based on the recommendations made by the Working Group constituted by RBI on Consolidated Sinking Fund (CSF) and Guarantee Redemption Fund (GRF), the maximum limit of SDF that can be availed by the States / UTs against the investments held under CSF/ GRF shall be 50% of the lower of –

  • Outstanding balance of the funds as on the last date of the 2nd preceding quarter.
  • The current balance held in CSF/ GRF. 

For investments held in ATBs, the maximum limit of SDF shall be 50% of the lower of –

  • Outstanding balance in ATBs (91 / 182 / 364 days) as on the last date of the 2nd preceding quarter.
  • The current ATB balance.

State Governments have to exhaust the SDF limit before availing WMA.

What is Overdraft (OD)?

If the Central Government borrows over and above the WMA limit, it amounts to Overdraft (OD). 

When the advances to the State Governments exceed their SDF and WMA limits, overdraft (OD) facility is triggered.

How long can State Governments be in Overdraft?

State Governments / UTs can avail OD on 14 consecutive days and can be in OD for a maximum number of 36 days in a quarter.

If the OD exceeds 100% of the WMA limit for five consecutive working days for the first time in a financial year, RBI will advise the State to bring down the OD level within the 100% of WMA limit. If such irregularity occurs on a second / subsequent occasion in the financial year, RBI will stop payments.

What are the limits for WMA?

(Updated on September 26, 2025)

The WMA limit for Central Government for the second half of the financial year 2025-26 (October 2025 to March 2026) will be ₹50,000 crore. RBI may trigger fresh floatation of market loans when the Government of India utilises 75% of the WMA limit. 

(Updated on June 28, 2024)

The aggregate WMA limit for State Governments / UTs will be ₹60,118 crore (earlier ₹47,010 crore) effective from July 01, 2024.

What are the interest rates on WMA and OD for Central Government?

The interest rates on WMA and OD for Central Government are –

  • WMA – Repo Rate
  • OD – Repo Rate (+) 2% 

What are the interest rates on SDF, WMA and OD for State Governments / UTs?

Scheme Limit Rate of Interest
SDF If availed against net annual incremental investment in CSF and GRF Repo rate (-) 2%
If availed against investment in G-sec / ATBs Repo rate (-) 1%
WMA If outstanding up to 3 months from the date of making the advance Repo rate
If outstanding beyond 3 months from the date of making the advance Repo rate (+) 1%
OD If availed up to 100% of WMA limit Repo rate (+) 2%
If it exceeds 100% of WMA limit Repo rate (+) 5%


References

Reserve Bank of India. (2018, January 15). 'Functions and Workings of RBI'. Retrieved from https://rbidocs.rbi.org.in/rdocs/Publications/PDFs/RWF15012018_FCD40172EE58946BAA647A765DC942BD5.PDF

Reserve Bank of India. (2022, April 01). 'Review of Ways and Means Advances Scheme of State Governments / UTs'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=53499

Reserve Bank of India. (2024, June 28). 'Review of Ways and Means Advances Scheme for State Governments/UTs'. Retrieved from https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=58187

Reserve Bank of India. (2025, September 26). 'WMA Limit for Government of India for October 2025 – March 2026'. Retrieved from https://rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=61299


Follow at - Telegram   Instagram   LinkedIn   Twitter

Labels:

Comments

Post a Comment

Popular Posts

Amendments in / additions to forex guidelines

Reserve Bank of India (RBI) has amended various forex guidelines. This article lists out some of the such recent amendments. What are the updates in the existing guidelines? Previous guidelines Revised guidelines Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. Persons resident outside India that maintain a rupee account in terms of regulation 7(1) of Foreign Exchange Management (Deposit) Regulations, 2016 may purchase or sell dated Government Securities / treasury bills and non-convertible debentures / bonds and commercial papers issued by an Indian company. The amount of consideration paid for the purchases shall be out of the funds held in the said rupee account. The balance...
Post a Comment
Read more

FX Global Code

Reserve Bank of India (RBI) has signed its renewed Statement of Commitment (SoC) to the FX Global Code.  What is FX Global Code? FX Global Code is a set of global principles of good practice in the foreign exchange market. The Code contains 55 principles that provide a common set of guidelines to promote the integrity and effective functioning of the wholesale foreign exchange market. The principles cover ethics, governance, execution, information sharing, risk management and compliance as well as confirmation and settlement. The establishment of the Code was facilitated by the Foreign Exchange Working Group (FXWG), which operated under the auspices of the BIS Markets Committee.  The Code was developed by a partnership between central banks and market participants from around the globe and was first published in 2017. The Code promotes a robust, fair, liquid, open, and appropriately transparent market in which a diverse set of market participants, supported by resilient infras...
Post a Comment
Read more

Nomination for demat accounts and mutual fund folios

Securities and Exchange Board of India (SEBI) had revised the guidelines on nomination for demat accounts and mutual fund folios.   Which entities are covered by the guidelines? The following regulated entities (REs) are covered by the guidelines – Asset Management Companies (AMCs) of Mutual Funds (MFs) and their Registrars to an issue and share Transfer Agents (RTAs)  Association of Mutual Funds in India (AMFI)  Recognized Depositories  Registered Depository Participants (DPs) What are the guidelines on nomination facility? Nomination shall be mandatory for single holding and optional for jointly held accounts / folios. However, an investor having single holding / account / folio can opt-out of nomination, either online or through physical / offline mode. In case a joint account / folio becomes single holding, post the demise of holders, either nomination or ‘opt-out’, is mandatory. Investors shall have the option to specify guardians when nominees are minors....
Post a Comment
Read more

Nomination Facility in Banks

Reserve Bank of India (RBI) has issued directions on nomination facility in deposit accounts, safe deposit lockers and articles kept in safe custody with the banks. What is the legal framework for nomination facility in banks? Banking Regulation Act, 1949 (BR Act) contain provisions on nomination facility in banks. Section 45ZA – Nomination for payment of depositors' money  Where a deposit is held by a banking company to the credit of one or more persons, the depositor / all the depositors together, may nominate one person to whom in the event of his / their death, the amount of deposit may be returned by the banking company. Where the nominee is a minor, the depositor shall appoint any person to receive the amount of deposit in the event of his death during the minority of the nominee. Section 45ZC – Nomination for return of articles kept in safe custody with banking company  Where any person leaves any article in safe custody with a banking company, such person may nominate ...
Post a Comment
Read more

Recognition of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs)

Reserve Bank of India (RBI) has invited applications for recognition of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs). What is the basis of Self-Regulatory Organisations (SROs) for Non-Banking Financial Companies (NBFCs)? Reserve Bank of India (RBI) had issued ‘ Omnibus Framework for recognition of Self-Regulatory Organisations for Regulated Entities of the Reserve Bank ’ dated March 21, 2024, wherein broad parameters, viz., objectives, responsibilities, eligibility criteria, governance standards, application process, etc., were specified. It was also stated that other sector-specific guidelines like number of SROs, membership, etc., shall be issued separately whenever a sectoral SRO is intended to be set up. RBI has now invited applications for recognition of SROs for the NBFC sector under the aegis of the aforesaid omnibus framework.  What are the membership criteria for the SRO for NBFCs? The SRO for NBFC sector is primarily envisaged for NBFCs...
Post a Comment
Read more