Bank Rate Explained
The term 'bank rate' refers to the rate of interest that a country's central bank charges on loans provided to commercial banks.
This is a key tool in monetary policy used to manage the money supply and credit conditions in the economy.
Option Analysis
- Option 1 is incorrect as it describes interbank lending rates between commercial banks.
- Option 2 is correct. It accurately defines the bank rate as the interest charged by the central bank on its loans to commercial banks.
- Option 3 is incorrect as it refers to lending rates between private commercial banks, not the central bank's policy rate.
- Option 4 is incorrect as it describes a retail lending rate from a non-scheduled bank to individuals.
The bank rate influences the overall cost of borrowing in the economy.
Similar Questions
- Who among the following has never been a Governor for Reserve Bank of India?
- Which system has been adopted by the Reserve Bank of India for note issue?
- Who among the following was the first Indian Governor of the Reserve Bank of India?
- What is the emblem of RBI?
- The regulatory authority of money supply in India is the:
- Which of the following is NOT a function of the Reserve Bank of India (RBI)?
On April 9, 2025, the Reserve Bank of India's Monetary Policy Committee (MPC) announced a cut in the repo rate by:
At the 57th meeting of the Monetary Policy Committee (MPC) of the RBI held from 29 September to 1 October 2025, what decision was taken on the policy repo rate and stance?
- In which year was RBI nationalized?
- The central board of the Reserve Bank of India can have a maximum of _____ full time Deputy Governors at any given time.
Important Questions from RBI
Which of the following statements is/are correct regarding the Monetary Policy Committee (MPC)?
1. It decides the RBI's benchmark interest rates.
2. It is a 12-member body including the Governor of RBI and is reconstituted every year.
3. It functions under the chairmanship of the Union Finance Minister.
Select the correct answer using the code given below:
The terms ‘Marginal Standing Facility Rate’ and ‘Net Demand and Time Liabilities’, sometimes appearing in news, are used in relation to
In the context of Indian economy; which of the following is/are the purpose/purposes of ‘Statutory Reserve Requirements’?
(1) To enable the Central Bank to control the amount of advances the banks can create
(2) To make the people’s deposits with banks safe and liquid
(3) To prevent commercial banks from making excessive profits
(4) To force the banks to have sufficient vault cash to meet their day-to-day requirements
Select the correct answer using the code given below.
If the interest rate is decreased in an economy, it will
The lowering of Bank Rate by the Reserve Bank of India leads to:
