Consider the following statements about the Special Drawing Facility (SDF) : 1. It makes provision of short-term loans by the RBI to the State Governments/UT Governments against Government Securities. 2. Interest rate charged by the RBI on it is the same as Repo Rate. 3. It can be availed by the State Governments/UT Governments only after exhausting the normal Ways and Means Advances limit. Which of the statements given above is/are correct?
1 only
Statement 1: The Special Drawing Facility (SDF) is a facility under which the RBI provides short-term loans to State/UT Governments against the pledge of Government Securities held by them, offering funds at more favourable terms than ordinary WMA. This statement is correct.
Statement 2: The interest rate charged on SDF is not simply the same as the Repo Rate; it is generally set below the WMA/overdraft rate as a preferential rate, distinguishing it from a plain Repo Rate linkage. This statement is incorrect.
Statement 3: The Special Drawing Facility is available to states independent of, and in fact ahead of, the normal WMA limit being exhausted, rather than being contingent on exhausting the normal WMA limit first. This statement is incorrect.
Hence, the answer is that only statement 1 is correct.
Similar Questions
Match List-I with List-II and select the correct answer using the code given below the Lists :
List-I
(Interest Rate System of the RBI)List-II
(Year of Introduction)A. Marginal Cost of Funds based Lending Rate 1. 2003 B. Base Rate 2. 2019 C. External Benchmark Lending Rate 3. 2016 D. Benchmark Prime Lending Rate 4. 2010 Code :
Consider the following statements about Ways and Means Advances (WMA) :
1. WMA is a provision in which the Reserve Bank of India provides long-term loans to the State Governments/UT Governments and Central Government.
2. WMA is a provision in which the Reserve Bank of India provides short-term loans to the State Governments/UT Governments and Central Government.
3. WMA was introduced in 1997.
4. Interest rate charged by the RBI on WMA is the same as the bank rate.
Which of the statements given above is/are correct?
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