The rate of interest offered by the Reserve Bank of India on deposit of surplus funds by commercial banks is known as _________________.

Bank Rate

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Repo Rate

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Reverse Repo rate

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None of the above

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Solution

The correct option is A Bank Rate
The rate of interest offered by the Reserve Bank of India on deposit of surplus funds by commercial banks is known as bank rate. Bank rate is one of the quantitative tools used to control the credit creation capacity of the commercial banks. The rate of interest at which banks borrow money for short periods from the Reserve Bank of India is called bank rate.

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92. The Reserve Bank of India (RBI) acts as a bankers’ bank. This would imply which of the following? [2012 - I]

i) Other banks retain their deposits with the RBI.

ii) The RBI lends funds to the commercial banks in times of need.

iii) The RBI advises the commercial banks on monetary matters.

Select the correct answer using the codes given below:

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