The RBI on Friday said it will provide more temporary financing to the states and Union territories.
The RBI provides temporary loan facilities to states for a tenure of 90 days, called ways and means advances (WMA), to enable them to meet mismatches in their payments and receipts.
States have been under considerable pressure since the last one month as the lockdown resulted in a spike in their expenses, while revenues have taken a massive hit.
“It has now been decided to increase the WMA limit of states by 60 per cent over and above the level as on March 31, 2020. to provide greater comfort to the states for undertaking Covid-19 containment and mitigation efforts,” RBI governor Shaktikanta Das said. He added that the increased limit will be available till September 30.
Earlier this month, the central bank had announced an increase in the WMA limit of states by 30 per cent.
However, it remains to be seen if states seek the WMA funds with numbers earlier this year showing that not many of them availed the facility. For January, an RBI data showed that five states availed over Rs 3,300 crore with Andhra Pradesh topping the list with an average amount of Rs 1 013 crore.
While states also borrow from the bond markets, recent data have shown that these have come at higher yields.