All but one, of the following statements is incorrect. Find the correct statement.

Balance of payments is a narrow concept than balance of trade.

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India is facing severe foreign exchange reserves crunch.

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Devaluation is the panacea for BOP problem.

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The RBI is the lender of last resort for Indian public sector banks.

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Solution

The correct option is D The RBI is the lender of last resort for Indian public sector banks.
Central bank performs the function of lender of last resort. It is the last means which commercial banks can approach when there is no other way to obtain credit for liquidity purposes.

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Similar questions

Q20. Consider the following statements:

1. Public Sector Asset Rehabilitation Agency (PARA) is being setup to deal with India’s twin balance sheet problem.

2. Twin Balance Sheet Problem (TBS) deals with two balance sheet problems. One with Indian companies and the other with Indian Banks.

Which of the statements are correct?

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