1
Question
The rate at which the RBI gives loans to the commercial banks is _____.
The rate at which the RBI gives loans to the commercial banks is _____.
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Solution
The correct option is B Bank rate
Bank Rate refers to the official interest rate at which RBI provides loans to the banking system which includes commercial/cooperative banks, development banks etc. Such loans are given out either by
direct lending or by rediscounting (buying back) the bills of commercial banks and
treasury bills. Thus, bank rate is also known as discount rate. Bank rate is
used as a signal by the RBI to the commercial banks on RBI’s thinking of what
the interest rates should be.
Hence, option (B) is the correct answer.
Bank Rate refers to the official interest rate at which RBI provides loans to the banking system which includes commercial/cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be.
Hence, option (B) is the correct answer.
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