Bank rate is defined as
A)Rate of interest charged by commercial banks from borrowers
B)Rate of interest allowed by commercial banks on demand deposits.
C)Rate of interest allowed by commercial banks on time deposits.
D)Rate which RBI purchases or rediscount bills of exchange of commercial banks.

Question

Quizplus · Accepted Answer

The bank rate is the rate at which the central bank of a country (like the Reserve Bank of India, RBI) lends money to commercial banks to meet their liquidity needs. It's a tool used by the central bank to control liquidity and inflation in the economy. Options A, B, and C describe different interest rates related to commercial banking activities, not the central bank's lending rate to commercial banks.

Bank Rate Is Defined as