Arrangement with RBI in the Interest of All: J&K Govt

The Jammu & Kashmir government today defended the new cash management arrangement with the RBI -- which restricts J&K Bank from extending overdraft facility to Jammu & Kashmir directly -- saying it is in the overall interest and benefit of the state, people and the lender. "The new cash management agreement with RBI as a supplementary agreement, necessitated to check continued financial indiscipline. The new arrangement is a major structural reform measure which is in the overall interest and benefit of the government people and the J&K Bank," Minister for Finance and Ladakh Affairs A B Rahim Rather said while addressing a press conference in Civil Secretariat today. Jammu & Kashmir enjoyed a special provision under which it could receive overdraft facility directly from J&K Bank instead of the way and means advances from the Reserve Bank of India (RBI). Overdraft is a facility extended by banks to obtain funds in excess than balance available from time to time. Rather said the overdraft facility with J&K Bank was meant for meeting a temporary miss-match between revenue and expenditures for only a few days. But, he added, due to continued financial constraints, the overdraft facility had become a permanent structural liability deficit in the state finances.