from outside the reserve bank and have included other “ external ” experts apart from senior functionaries from the reserve bank, as members. the first informal advisory committee on the wma to state governments was constituted in 1998, under the chairmanship of shri b. p. r. vithal. as a major break from the past practices, the vithal committee recommended the de - linking of the size of the normal wma limit with the minimum balances held by the states on the grounds that " fixing the wma limits as multiples of an unchanged minimum balance, as in the past, does not capture the differing needs of the states in line with the different growth in their budgetary transactions. this has resulted in wide inter - state variations in the wma limits in relation to the size of the budget, and this needs to be corrected. " the vithal committee instead proposed linking the normal wma limit to the cash flows of the state. the recommendations were implemented in the light of further consultations with the states and the centre. subsequently, similar committees ( ramachandran committee, 2003 and bezbaruah committee, 2005 ) have refined and improved upon the wma arrangements. it is noteworthy that wma arrangements have ceased to be a contentious matter amongst the centre, states and rbi on account of the reliance placed on the advice from the outside experts and intensive consultations amongst the stakeholders, in finalising the arrangements. the upsurge in the surplus cash balances of some of the state governments since the middle of 2004 - 05, in contrast to the liquidity pressures witnessed in the earlier period, has posed newer challenges to financial and cash management of state governments. the issues relating to investment of cash balances of the states were discussed at the 18th conference of state finance secretaries held in august 2006 and also in the 20th conference of state finance secretaries held in august 2007. taking note of the discussions, the reserve bank is in the process of formulating the plans in this regard, in consultation with the centre and the states. advice on fiscal management the importance of fiscal transparency has got reinforced in the recent years after government of india subscribed, in 1997, to the special data dissemination standards ( sdds ) promulgated by the international monetary fund. in the light of this development, it was decided to constitute a group of the state finance secretaries to suggest various measures of disclosure, which could be introduced in the budgetary exercise of the state governments. it was also decided that

system and thereby obviate the need to go back to the informal system. banks, however need to give wide publicity to the scheme at their rural and semi urban branches. in case where the loans are under government sponsored schemes the state level bankers'committee ( slbc ) is expected to evolve a suitable policy. v. in urban areas, credit cards enable households to manage to get their credit needs met by the banking system, with not only the ability to make purchases on credit but also facility to draw cash against card. in the rural areas, there are no points of sale or outlets where plastic cards can be used. banks have been recently advised by rbi to provide a general purpose credit card ( gcc ) facility at their rural and semi urban braches the credit facility extended under the scheme will be in the nature of revolving credit. the gcc - holder will be entitled to draw cash from the specified branch of bank up to the limit sanctioned. banks would have flexibility in fixing the limit based on the assessment of income and cash flow of the entire household. however, the total credit facility under gcc for an individual should not exceed rs. 25, 000. interest rate on the facility may be charged as considered appropriate and reasonable. the borrowers would be eligible for availment of the credit facilities provided under gcc, as per their requirement, without any insistence on security and the purpose or end - use of the credit. fifty per cent of credit outstanding under gcc up to rs. 25, 000 will be eligible for being treated as indirect agricultural financing coming under the ambit of priority sector lending norms. the eligibility criteria will be subject to review. it is not necessary that gcc should be linked to purchases and gcc may not necessarily be in the form of a card. gcc can be issued in the form of a pass book, if the holder of gcc desires to operate cash withdrawals from bank branches. it is expected that banks will come out with their own schemes to popularise this product amongst the rural clientele. vi. a major recommendation made by the internal group set up by rbi on micro finance ( khan committee ), currently under consideration, is to permit banks to use micro finance institutions as business facilitators and correspondents to enable banks to increase their outreach and ensure greater financial inclusion. this recommendation which will lead to provision of micro - finance services at the doorstep of the customer, can make substantial change in the availability of comprehensive financial services in rural