RBI sets Ways & Means Advances limit for H2 FY26

The Reserve Bank of India (RBI), in consultation with Government of India, fixed the Ways and Means Advances (WMA) ceiling for the second half of FY 2025-26 (October 2025–March 2026). The WMA mechanism provides short-term liquidity support to the central government to bridge temporary mismatches in receipts and expenditure. Fixing the limit is a routine but materially significant fiscal-monetary coordination step: it affects government cash management, market borrowing calendars, and liquidity conditions in money markets. The article explains the purpose of WMA, operational modalities (normal and special WMA), and macro implications — higher WMA usage can increase pressure on market yields and signal near-term fiscal stress, while conservative WMA limits indicate tighter monetary stance. For corporates and market participants, the WMA decision informs expectations on interest rates, auction schedules and treasury management. The piece also flags compliance with statutory limits and the consequences when the WMA ceiling is approached (e.g., fresh market borrowings, use of ways and means adjustments).