Question

Explain bank rate.

Answer 1

Bank rate is the minimum rate of interest charged by the Central Bank from commercial banks while giving loans to them against eligible securities. It is also the rate at which the Central Bank re-discounts the bills of commercial banks and provides financial assistance to commercial banks.

It is also called as re-discount rate.
Bank rate is the lending rate of Central Bank and it is adjusted according to the economic requirement. The Bank rate affects both the cost and availability of credit.