Question

What role of RBI is known as 'lender of last resort?

Answer 1

When commercial banks fail to meet their financial requirements from other sources, they approach the central bank, which gives loans and advances as lender of the last resort. If commercial banks have insufficient reserves to meet any financial obligation, then in order to avoid financial panic, there must be a guarantee that banks can get cash if they really need it.
Central Bank Is the only institution that performs the role of lender of last resort.