RBI relaxes overdraft norms for states & UTs

The Reserve Bank of India has come forward to help out the cash starved states and Union Territories affected by the lockdown by relaxing the norms to avail overdraft facilities for a longer period until September 30,2020. Considering their cashflow problem, India’s central bank says in a circular,  it has permitted “greater space” to state governments and Union Territories for availing overdraft facilities. To provide greater flexibility to the state governments to tide over their cashflow mismatches, the RBI has increased the number of days for which a state can be in overdraft. The number of days for which a State/ UT can be in overdraft continuously has been increased to 21 working days from the current stipulation of 14 working days. Similarly, the number of days for which a State/ UT can be in overdraft in a quarter has been increased to 50 working days from the current 36 working days. All other stipulations remain unchanged. The new arrangement will come into force with immediate effect and will remain valid till September 30, 2020, the circular added. (Picture courtesy:The Financial Express)