2026 · Q21
Consider the following statements about the Special Drawing Facility (SDF) :
- 1It makes provision of short-term loans by the RBI to the State Governments/UT Governments against Government Securities.
- 2Interest rate charged by the RBI on it is the same as Repo Rate.
- 3It 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?
indian-polity-economybanking-finance
- A1, 2 and 3
- B1 only
- C1 and 3 only
- D2 and 3 only
Explanation
The Special Drawing Facility is a short-term RBI facility for State/UT governments extended against the collateral of government securities held by them — statement 1 is correct. Its interest rate is one percentage point below the repo rate, not equal to the repo rate — statement 2 is wrong. Further, a State draws on the SDF first; the normal WMA limit is available only after the SDF limit is exhausted — so statement 3 reverses the order and is wrong. Hence only statement 1 is correct.