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Coronavirus impact: RBI allows 'greater space' to states, UTs for availing overdraft facilities

RBI has increased the number of days for which a state/UT can be in "overdraft" continuously to 21 working days from the current 14 days; this will provide greater flexibility to states to tide over cash-flow mismatches

twitter-logoBusinessToday.In | April 8, 2020 | Updated 12:18 IST
Coronavirus impact: RBI allows 'greater space' to states, UTs for availing overdraft facilities
This arrangement will come into force with immediate effect and will remain valid till September 30

The Reserve Bank of India (RBI) has relaxed rules for states and union territories to avail overdraft facilities to boost cash flow amid the ongoing 21-lockdown. "RBI permits greater space to State Governments/ Union Territories for availing overdraft facilities," an apex bank statement said.

The decision has been taken to provide greater flexibility to states to tide over cash-flow mismatches. An overdraft facility allows account holders to withdraw more money than they have in their account for a specific period of time.

The RBI has increased the number of days for which a state/UT can be in "overdraft" continuously to 21 working days from the current 14 days. The number of days for which they can be in overdraft in a quarter has also been increased to 50 working days from the current 36 working days.

All other stipulations remain unchanged, the apex bank said, adding that this arrangement would come into force with immediate effect and would remain valid till September 30.

Also read: Coronavirus pandemic: When and how lockdown will be lifted? A primer

To curb the spread of coronavirus both central as well as state governments have taken a slew of measures, including enforcing social distancing among the public.

The nationwide lockdown till April 14 has adversely impacted economic activity. Governments have also diverted their resources to deal with the pandemic. The total number of active COVID-19 cases stands at 4,643, with the death toll at 149, according to the Ministry of Health and Family Welfare's website.

The number of novel coronavirus cases has risen by 662 in the past 24 hours with Maharashtra being the worst-affected.

Also read: Coronavirus Live Updates: PM Modi holds virtual meet with opposition leaders; country's active cases at 4,643

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