Economics • Banking & FinanceMedium
What is the primary purpose of 'Ways and Means Advances (WMA)' provided by the Reserve Bank of India?
A. To bail out distressed cooperative banks facing liquidation.
B. To finance long-term infrastructure projects undertaken by state-owned corporations.
C. To bridge temporary mismatches in the cash flows and receipts of the Central and State Governments.✓ Correct Answer
D. To provide foreign exchange reserves support during a balance of payments crisis.
💡 Solution & Explanation
Ways and Means Advances are short-term liquidity instruments provided by the Reserve Bank of India under Section 17(5) of the RBI Act to help both central and state governments manage temporary cash flow mismatches. These are distinct from long-term bonds or market loans floated for capital expenditure.
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