Question

For Banks, Central Bank act as a _________.

• A. Clearing agent
• B. Borrower
• C. Lender
• D. Both a & c

Answer 1

The correct option is D Both a & c

Central bank is an apex bank that controls the entire banking system of a country. Central bank acts as a clearing agent, borrower and lender to all the commercial banks as they help the commercial banks by discounting or clearing their bills against a small charge, borrow money from the commercial banks that the time of urgency and lend money to all the banks at the time of liquidity crunch against some collateral.