RBI relaxes rules for withdrawal from CSF; States may get extra Rs 13,300 crore
Mumbai: In a bid to supply extra assets to states, the Reserve Bank of India (RBI) on Friday eased the principles governing withdrawal from the Consolidated Sinking Fund leading to launch of further Rs 13,300 crore to them.
State governments keep a Consolidated Sinking Fund (CSF) with RBI as a buffer for compensation of their liabilities.
“In the light of the COVID-19 pandemic and the consequent stress on state government finances, the RBI has reviewed the scheme and has decided to relax the rules governing withdrawal from CSF, while at the same time ensuring that depletion of the Fund balance is done prudently” RBI Governor Shaktikanta Das stated.
This will allow states to satisfy a bigger proportion of their redemption of market borrowings due within the present monetary 12 months from CSF and these relaxations to states will launch an extra quantity of about Rs 13,300 crore, he stated.
“Together with the normally permissible withdrawal, this measure will enable states to meet about 45 per cent of their redemptions due in 2020-21 through withdrawal from CSF. This change in withdrawal norms will come into force with immediate effect and will remain valid till March 31, 2021,” he stated.
In response to COVID-19, the Governor stated, the requirement of fiscal assets has elevated with probably implications for market situations going ahead.
“The RBI shall remain watchful and support the smooth completion of the borrowing programme of the Centre and states in the least disruptive manner,” he famous.
Last month, the RBI elevated Ways and Means Advance (WMA) restrict of states by 60 per cent.
This was estimated to create an area for Rs 12,000 crore for state governments seeking to elevate cash.
“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, and to plan their market borrowing programmes better,” RBI had stated.
The central financial institution had additionally elevated the variety of days states may be in steady overdraft to 21 days from 14, and the variety of days states may be in overdraft in 1 / 4 was raised from 32 to 50 days.
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