2026 · Q19
Consider the following statements about Ways and Means Advances (WMA) :
- 1WMA is a provision in which the Reserve Bank of India provides long-term loans to the State Governments/UT Governments and Central Government.
- 2WMA is a provision in which the Reserve Bank of India provides short-term loans to the State Governments/UT Governments and Central Government.
- 3WMA was introduced in 1997.
- 4Interest rate charged by the RBI on WMA is the same as the bank rate.
Which of the statements given above is/are correct?
indian-polity-economybanking-finance
- A1 only
- B1 and 3 only
- C2 and 3
- D1, 3 and 4
Explanation
Ways and Means Advances are short-term loans that the RBI extends to the Central and State/UT governments to tide over temporary mismatches between receipts and payments — statement 2 is correct, while statement 1's 'long-term' is wrong. The WMA scheme was introduced in 1997, replacing ad-hoc Treasury Bills — statement 3 is correct. The interest on WMA is linked to the repo rate, not the bank rate — statement 4 is wrong. Hence statements 2 and 3.