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?
2 and 3
Statement 1: Ways and Means Advances (WMA) are short-term, not long-term, loans provided by the Reserve Bank of India to State/UT Governments and the Central Government to help them tide over temporary mismatches in receipts and payments. This statement is incorrect.
Statement 2: WMA is correctly described as a facility for short-term loans extended by the RBI to State/UT Governments and the Central Government. This statement is correct.
Statement 3: The WMA scheme for State Governments was introduced by the RBI in 1997, replacing the earlier ad hoc Treasury Bills system. This statement is correct.
Statement 4: The interest rate charged by the RBI on WMA is linked to the Repo Rate, not the Bank Rate. This statement is incorrect.
Hence, the answer is that statements 2 and 3 are 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 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?
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