A day after the Centre decided to cap its borrowings at Rs 1.2 trillion (lakh crore), the RBI has set the ways and means advances (WMAs) limit at Rs 1.25 trillion for the second half of the fiscal.

WMAs are temporary advances given by the central bank to the government to tide itself over any mismatch in receipts and payments.

The limit for the Centre was raised to Rs 1.2 trillion in the first half. But on April 20, it was jacked up to Rs 2 lakh crore. Last year, the limit was set at Rs 75,000 crore for the first half and Rs 35,000 crore for the latter six months.

The interest on a WMA loan is at the repo rate which now stands at four per cent. There is a provision for an overdraft at a rate of two per cent above the repo rate.