Question

The bank rate is _____________.

• A. free to fluctuate according to the forces of demand and supply
• B. set by the RBI
• C. set by the RBI as directed by the Union Ministry of Finance
• D. set by the RBI as advised by the Indian Banks' Association

Answer 1

The correct option is B set by the RBI

Bank rate is the rate charged on the loans offered by the Central bank to the commercial banks without any collateral.It is set by The Reserve Bank of India determines the bank rate which is usually increased at the time of inflation to reduce the money supply in the economy and vice versa.