Economics • Banking & FinanceMedium
What does the 'Ways and Means Advances (WMA)' facility provided by the Reserve Bank of India entail?
A. Temporary credit facilities provided to the Central and State Governments to bridge mismatches in cash flows.✓ Correct Answer
B. Emergency financial assistance extended to distressed non-banking financial companies (NBFCs).
C. Subsidized loans provided to commercial banks for priority sector expansion.
D. Foreign currency swap lines opened for commercial importers.
💡 Solution & Explanation
Ways and Means Advances are temporary loan facilities provided by the Reserve Bank of India to the Central and State Governments to help them bridge temporary mismatches in cash flows. They are distinct from long-term market borrowings or open market operations, acting purely as short-term liquidity cushions. Knowledge of central banking instruments is essential for economics questions in competitive assessments.
More Economics Banking & Finance questions
- In the context of Indian banking, what does the term 'Special Mention Account (SMA)' signify?
- What does the term 'Base Rate' signify in the lending framework of Indian commercial banks?
- Examine the role of the 'National Bank for Agriculture and Rural Development' (NABARD) in India. Which of the…
- How do Regional Rural Banks operating in Punjab balance their statutory priority sector lending targets with…
- What does the term 'Prompt Corrective Action (PCA)' framework implemented by the RBI entail for scheduled…