Q155
Indian EconomyMoney, Banking & Financial Institutions
The bank rate is the interest rate that
- a.the Reserve Bank charges the non-bank financial intermediaries for lending them money.
- b.the commercial banks charge the business houses for giving them loans.
- c.the Reserve Bank charges the commercial banks for lending them money.
- d.the Foreign Exchange Banks charge the users of foreign exchange.
Answer: (C) the Reserve Bank charges the commercial banks for lending them money.
The bank rate is the rate at which the RBI lends to (or rediscounts bills of) commercial banks for the longer term, without collateral of securities. Rates charged by banks to businesses are lending rates, and the RBI does not lend to non-bank intermediaries at the bank rate.