The Reserve Bank of India has published the September 2026 Report of the Advisory Committee on Ways and Means Advances to State Governments. The Committee recommends increasing the aggregate state-wise WMA limit from ₹61,008 crore to ₹67,839 crore. The RBI’s September 29, 2026 press release states that the recommendations will be examined by the Reserve Bank, so the report itself does not make these changes operative.
RBI WMA Report 2026: ₹67,839 Crore Limit Recommended for State Governments
The major recommendation is a proposed 11.2% increase in the aggregate Ways and Means Advances limit for States/UTs with legislature, from ₹61,008 crore to ₹67,839 crore. Alongside the higher limit, the Committee proposes a new methodology based on adjusted revenue receipts, annual revision of state-wise WMA limits, tighter Overdraft limits, a higher SDF limit against CSF, and greater operational flexibility for CSF/GRF.
The Report of the Advisory Committee on Ways and Means Advances to State Governments is dated September 2026. The Advisory Committee was constituted by the RBI on April 30, 2026 under the chairmanship of Shri I S N Prasad, former Additional Chief Secretary, Government of Karnataka.
Quick Answer: What Did the RBI WMA Committee Recommend in 2026?
The Committee’s principal WMA recommendation is to raise the aggregate state-wise limit from ₹61,008 crore to ₹67,839 crore. It recommends calculating state-wise limits using adjusted revenue receipts rather than the expenditure-based approach used under the existing methodology.
The Committee also recommends reducing the maximum period a State can remain in Overdraft from 14 to 10 consecutive working days, and from 36 to 30 working days in a calendar quarter. For SDF, it recommends increasing the limit against eligible CSF corpus from 50% to 75%.
These are recommendations, not an effective amendment. The RBI press release dated September 29, 2026 says that the Committee’s recommendations shall be examined by the Reserve Bank.
What Are Ways and Means Advances for State Governments?
Ways and Means Advances, or WMA, are short-term financial accommodation provided by the RBI to help States manage temporary mismatches between cash receipts and payments. Under Section 17(5) of the RBI Act, 1934, WMA has been available to State Governments since 1938, and an advance is repayable within three months from the date it is made.
WMA is designed as a temporary cash-flow bridge. It is not intended to be a regular source of financing for a State’s budget deficit. The Committee reiterates that RBI liquidity facilities should be used to manage short-term mismatches rather than finance fiscal deficits.
How Do SDF, WMA and OD Work in the RBI Liquidity Framework?
The report describes a hierarchy in which SDF is used first, WMA next, and OD after the WMA limit is exhausted. SDF provides collateralised liquidity support against eligible investments such as CSF/GRF balances and Auction Treasury Bills. WMA is the temporary advance facility, while OD provides support beyond the WMA limit subject to prescribed conditions.
What Does the 2026 WMA Report Recommend?
Why Is the WMA Limit Being Raised?
The Committee notes that State Governments’ budget sizes have increased significantly, particularly in the post-pandemic period. At the same time, the Committee observed that SDF has become the main window of liquidity support in recent years, with WMA and OD utilisation declining relative to SDF.
The recommendation is therefore not based simply on applying the same percentage increase to State budgets. The Committee specifically considered the overall liquidity support available through SDF, WMA and OD and concluded that there is a case for increasing WMA limits while maintaining discipline around how those limits are calculated.
What Is the New Recommended Methodology for State-wise WMA Limits?
The Committee recommends using revenue receipts as the base for determining state-wise WMA limits. It considers revenue receipts a relatively transparent indicator of repayment capacity and considers them more appropriate than total expenditure for a facility intended to address temporary cash-flow mismatches.
What Are Adjusted Revenue Receipts?
Adjusted Revenue Receipts = Revenue Receipts − Lottery Expenditure + Net Expenditure on Natural Calamities, where the latter is included only when positive.
The Committee recommends deducting lottery-related expenditure because including gross lottery receipts could give States with large lottery operations an unintended advantage when WMA limits are determined. It also recommends adding positive net expenditure incurred on natural calamities because disaster-related expenditure can create additional short-term cash requirements where relief receipts are insufficient.
For the proposed revision, the Committee used the average adjusted revenue receipts for the three accounting years 2022-23, 2023-24 and 2024-25.
To reduce dispersion in the state-wise WMA limits, the Committee also considered ceilings on the maximum and minimum percentage increase from the existing limits. The resulting recommendations in Table VIII.2 range from 8.5% to 13.5% across the States/UTs.
Why Is an Annual 4% Cap Proposed?
The Committee recommends that RBI may undertake an annual revision using the latest three years’ final accounts data. However, the annual upward revision in WMA limits should be capped at 4%. The Committee also recommends that the revised limit of a State should not be lower than its existing WMA limit.
The report links this cap to the growth in SDF capacity arising from interest accrued on securities held in CSF/GRF. According to the Committee, restricting annual WMA growth to 4% would allow total SDF/WMA financial accommodation to grow by about 6% annually even without fresh contributions to CSF/GRF.
State-wise WMA Limits Recommended by the Committee
The report’s Table VIII.2 sets out the recommended state-wise limits. These figures are recommended limits, not automatically effective limits.
What Does the Report Recommend on Overdraft (OD)?
The Committee recommends tightening the permitted duration of Overdraft because the use of OD by States has declined significantly in recent years. It proposes two numerical changes:
The proposed reduction is presented as a measure to encourage greater discipline and better assessment of evolving liquidity requirements.
What Is Proposed for Special Drawing Facility (SDF)?
The Committee recommends increasing the SDF limit against eligible CSF investments from 50% to 75%. The rationale is to incentivise States to build CSF/GRF balances towards the desirable corpus level and make greater use of collateral-backed liquidity support.
The report also addresses the temporary relaxation introduced by the RBI in January 2026. That temporary arrangement raised the SDF limit against eligible GRF balances from 50% to 75% and changed the reference period used for calculating SDF against CSF/GRF. The arrangement was extended until September 30, 2026. The Committee recommends extending the relaxation beyond end-September 2026.
What Happens When CSF/GRF Balances Exceed 5%?
The Committee recommends that concessional SDF support should apply to CSF/GRF balances up to 5% of a State’s outstanding marketable debt or guarantees. Where the corpus exceeds the 5% level, the State could receive liquidity support against the excess at a rate higher than the SDF rate, with the applicable rate to be decided by RBI.
What Are CSF and GRF?
The Consolidated Sinking Fund (CSF) is intended to provide a reserve for State debt redemption obligations, while the Guarantee Redemption Fund (GRF) provides a buffer for payment obligations arising from invocation of State Government guarantees.
The Committee recommends that States progressively build the CSF/GRF corpus to a desirable level of at least 5% of outstanding marketable debt or guarantees, respectively. It also encourages States that have not yet become members of these funds to join them.
What Flexibility Is Proposed for CSF/GRF Withdrawals?
The Committee proposes greater flexibility for States that have built their CSF/GRF corpus beyond the recommended 5% level. Such States may be allowed to withdraw funds for any purpose, including inter-fund transfers, provided the source fund does not fall below 5% after the withdrawal or transfer.
States that have not yet reached the 5% level would continue to face purpose-based withdrawal restrictions. For those States, withdrawals would be limited to intended purposes such as debt redemption liabilities or guarantees invoked during the year.
The Committee also recommends dispensing with a specific lock-in period for CSF/GRF funds in view of the proposed changes.
Does the Report Change the Interest Rate on WMA, SDF or OD?
No immediate rate change is made by the Committee report. The Committee recommends that interest rates on financial accommodation through SDF, WMA and OD may be decided by RBI, keeping in view the interests of States and the intended purpose of maintaining CSF/GRF.
This distinction matters because the report discusses the interest-rate framework, but the Committee’s recommendation itself is not an operative rate notification.
What Does the Report Say About State Cash Management?
The Committee places considerable emphasis on improving State cash and debt management. It recommends that States use SDF/WMA/OD for genuine temporary cash-flow mismatches instead of relying on unplanned market borrowing for such requirements.
It also recommends that States spread market borrowings across the financial year and avoid excessive concentration in the fourth quarter. The Committee highlights the Benchmark Issuance Strategy (BIS) introduced for State market borrowing from financial year 2026-27 and recommends that remaining States also adopt it.
The report notes that some States maintain substantial precautionary cash balances. Such balances may create a negative carry when the return on idle cash is lower than the cost of market borrowing. States are therefore encouraged to improve cash-flow forecasting and optimise surplus cash management.
The recommended framework is not simply about giving States a bigger WMA window. It combines greater short-term liquidity availability with tighter limits on OD and an emphasis on better cash forecasting and debt-management practices.
What Is the Position on Minimum Cash Balances?
The Committee recommends status quo on the minimum cash balance requirement for individual States. The report explains that the minimum cash balance concept has become less significant for determining WMA limits after its earlier linkage with WMA methodology was removed.
What Does the Report Say About SNA-SPARSH?
The Committee separately examined the impact of onboarding States onto SNA-SPARSH, the real-time system designed to support just-in-time release of funds under Centrally Sponsored Schemes.
As stated in the report, all 28 States and three Union Territories with legislatures had gone live on SNA-SPARSH. The report also notes that implementation of existing Centrally Sponsored Schemes through SNA-SPARSH was decided from November 1, 2025, with most large flagship schemes already onboarded.
The report recognises that the transition initially created some liquidity-management concerns because States no longer had the same float of Central funds available for timing their cash flows. However, after the initial adjustment period, the Committee concluded that States were able to manage their liquidity requirements under the new system.
The report’s data analysis also indicates that the introduction of SNA-SPARSH did not result in a significant surge in States’ overall financial accommodation requirements. The decline in WMA/OD utilisation alongside greater SDF utilisation is an important part of the Committee’s assessment.
Why Are CSF and GRF Important in the New Framework?
The report treats reserve funds as an important buffer against fiscal and liquidity risks. CSF is designed to help with debt redemption obligations, while GRF is designed to meet obligations arising from the invocation of State guarantees.
The Committee notes considerable differences in corpus levels across States. Some States remain below the desirable 5% level, while others have accumulated balances well above it. The recommended framework attempts to balance two objectives: encouraging States to build adequate reserve funds while preventing excess balances from remaining unnecessarily locked away.
Who Is Covered by the Report?
For the purposes of the report, “States” refers to State Governments and Union Territories with legislatures. The RBI acts as banker and debt manager for 28 State Governments and three Union Territories — Puducherry, Jammu and Kashmir and Delhi — although the report notes that its debt-management role for Sikkim is limited.
How Does the 2026 Proposal Compare With Earlier WMA Revisions?
The WMA methodology has changed several times over the years. Earlier approaches used minimum cash balances, total expenditure or combinations of revenue and capital expenditure. The current Committee specifically revisits the choice of base and concludes that revenue receipts provide a better foundation for the present purpose.
The aggregate WMA limit was previously revised to ₹47,010 crore with effect from April 1, 2022 and then to ₹60,118 crore from July 1, 2024. After Delhi entered into a banking agreement with the RBI in January 2026, the aggregate limit referred to in the report became ₹61,008 crore.
What Does the Committee Say About Fiscal Deficits?
The Committee makes a clear distinction between liquidity support and fiscal financing. WMA, SDF and OD are intended to manage temporary cash-flow mismatches. They are not intended to become a regular mechanism for financing a State’s budget deficit.
This distinction is important when interpreting the proposed increase to ₹67,839 crore. A higher WMA limit does not mean that States are being given a new source of permanent budget financing. The Committee’s framework continues to treat the facility as short-term liquidity support.
What Should State Governments Watch Now?
Because the September 2026 document is an Advisory Committee report, it does not itself make the recommended WMA limits operative or prescribe a new filing process. The immediate step is to monitor whether and how the RBI operationalises the Committee’s recommendations.
- Any RBI decision on the recommended aggregate WMA limit of ₹67,839 crore.
- The final methodology for calculating state-wise limits using adjusted revenue receipts.
- Whether the proposed 4% annual cap is operationalised.
- Any RBI notification changing OD limits from 14/36 days to 10/30 days.
- Whether the 75% CSF-linked SDF recommendation is implemented and how eligibility is defined.
- Whether the temporary CSF/GRF SDF relaxation is extended beyond September 30, 2026.
- Any revised operational guidelines for CSF/GRF withdrawals, inter-fund transfers or lock-in periods.
Compliance / Monitoring Checklist
Frequently Asked Questions
1. What is the recommended aggregate WMA limit for States in 2026?
The Committee recommends an aggregate state-wise WMA limit of ₹67,839 crore, compared with the ₹61,008 crore limit referred to in the report.
2. Is the ₹67,839 crore WMA limit already effective?
No. The RBI’s September 29, 2026 press release says that the Committee’s recommendations will be examined by the Reserve Bank. The report is therefore not itself an operative revision of the WMA scheme.
3. What is the proposed basis for calculating WMA limits?
The Committee recommends using adjusted revenue receipts, calculated as revenue receipts minus lottery expenditure plus positive net expenditure on natural calamities.
4. What is the proposed annual WMA revision cap?
The Committee recommends that annual upward revision of state-wise WMA limits should be capped at 4%, while ensuring that no State’s revised limit falls below its existing limit.
5. What change is proposed for Overdraft facility?
The Committee recommends reducing the maximum consecutive OD period from 14 to 10 working days and the maximum OD period in a calendar quarter from 36 to 30 working days.
6. What change is proposed in SDF against CSF?
The Committee recommends increasing the SDF limit against eligible CSF corpus from 50% to 75%. It also recommends extending the January 2026 temporary relaxation relating to SDF against CSF/GRF beyond September 30, 2026.
7. What is the recommended CSF/GRF corpus level?
The Committee recommends progressively building CSF/GRF to at least 5% of outstanding marketable debt/guarantees, respectively.
8. Can States withdraw CSF/GRF balances freely?
The Committee recommends allowing greater flexibility for States whose corpus exceeds the recommended 5% level, including withdrawals for any purpose and inter-fund transfers, provided the source fund does not fall below 5% after the transaction. States below the 5% level would continue to face purpose-based withdrawal restrictions.
9. Did the Committee recommend a new interest rate for WMA, SDF or OD?
No specific new rate is prescribed by the report. The Committee recommends that RBI determine the applicable rates for SDF, WMA and OD after considering the interests of States and the purpose of CSF/GRF.
10. When will the next WMA review take place?
The Committee recommends that the next Committee to review WMA for State Governments should be constituted after the release of the Seventeenth Finance Commission report.
CorpLawUpdates Analysis
The September 2026 WMA report is significant because it proposes a shift in both the size and architecture of liquidity support available to State Governments. The proposed ₹67,839 crore limit is only one part of the framework.
The more structural change is the move towards adjusted revenue receipts as the base for state-wise WMA calculations. This approach is intended to connect the temporary liquidity window more closely with revenue capacity rather than automatically tracking expenditure growth.
At the same time, the Committee does not propose simply expanding access without safeguards. The recommended 4% annual cap on WMA growth and tighter OD periods point in the opposite direction: States could receive a larger WMA envelope, but repeated or prolonged dependence on OD would become more restricted.
The SDF and CSF/GRF recommendations are designed around the growing role of reserve-backed liquidity. For practitioners, the critical distinction is between what the Committee has recommended and what RBI ultimately notifies and operationalises. Until the RBI takes the next step, the September 2026 report should be treated as the Committee’s recommendation rather than an automatically effective amendment.
At a Glance: 2026 WMA Recommendations
Source Note
Document: Report of the Advisory Committee on Ways and Means Advances to State Governments
Issuing authority: Reserve Bank of India
Date: September 2026
Committee: Advisory Committee on Ways and Means Advances to State Governments, chaired by Shri I S N Prasad
Publication announcement: RBI Press Release 2026-2027/1211 dated September 29, 2026
Status: Committee recommendations pending examination by RBI. The RBI announcement expressly states that the recommendations shall be examined by the Reserve Bank.
Disclaimer: This article is for informational and educational purposes only and does not constitute legal or regulatory advice. Readers should verify the applicable primary regulatory source before taking action.
