No relaxation for Bengal through WMA: RBI

The Reserve Bank of India (RBI) on Wednesday said West Bengal would not be given any special relaxation for borrowing through the ways and means advances (WMA).

The WMA is a mechanism used by RBI through which it provides funds to the states, banking with it, to help them to tide over temporary mismatches in the cash flow of their receipts and payments.

“No way any exception can be made in respect to ways and means advances (WMA) to any state,” D Subbarao, Governor, RBI, told reporters after meeting Mamata Banerjee, chief minister, West Bengal at the state secretariat here.

The earlier Left Front government had sought relaxation in borrowing through ways and means facility.

In December 2010, Subbaroa had said that RBI would consult with the central government before taking any decision.

“There is a formula that drives the access of state to overdraft ways and means and special ways and means, both in terms of quantum and number of days they can avail this in each quarter. The state government said that they want some relaxation, which we are studying. We have not come back to the state government with a specific response on it,” Subbarao had said last year.

West Bengal is one of the most indebted states in the country, with an accumulated debt of debt of Rs 1.92 lakh crore.

On the financial health, the RBI governor said “I am told by the chief minister and the finance minister that efforts are being made to improve the situation. RBI will extend all kind of support with available instruments under its disposal.”

This apart, the credit deposit ratio in West Bengal was 62 per cent, much below the national average of 74 per cent, he said.

Subbarao said that he had requested the chief minister to provide Rs 83 crore recapitalisation of the three regional rural banks in the state. Subsequently, the Centre would provide an additional Rs 235 crore for recapitalisation, he said

There was also a need increase tax revenue in the state from small and medium enterprises, and the state needed to formulate a scheme for the same, he added.

Also, in West Bengal, due to lack of infrastructure, only about 4,000 villages with a population of more than 2,000 people had been vested with banking facilities, which is much below the target of about 7,486 by March 2012.