The Reserve Bank of India (RBI) Wednesday increased the temporary loan facility for all states and union territories by about 30% to help them tide over the current mismatch in the cash flow of their receipts and payments at the time of a country-wide lockdown.
It also allowed more time to exporters for realisation and repatriation of export products in view of the hardships faced by traders in the lockdown period due to COVID-19.
The RBI gives temporary loan to the centre and state governments as a banker to the government. This facility is called Ways and Means Advances (WMA). Under WMA, Centre and states can borrow money from RBI for a period of 90 days.
On Tuesday, the RBI had increased the WMA for the centre to Rs 1.2 lakh crore for the first half, up from Rs 75,000 crore in the same period last year, and Rs 35,000 crore for the second half of 2019-20.
On the export front, at present, the value of goods or software exports made by the exporters is required to be realised fully and repatriated to the country within a period of nine months from the date of exports. The RBI now extended the period to 15 months from the date of exports for all overseas shipments made up to July 31.
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