Understanding the Lender of Intermediate Resort

The term ‘lender of intermediate resort’ typically refers to an institution that provides short-term funds or liquidity to other financial institutions, acting as an intermediary within the broader financial system. This role is distinct from the central bank's role as the ultimate ‘lender of last resort’.

Role Analysis of Options

• RBI (Reserve Bank of India): Acts as the ‘lender of last resort’, providing funds to banks during severe liquidity crises but is not typically considered an 'intermediate' lender in the interbank market sense.
• NABARD (National Bank for Agriculture and Rural Development): Primarily focuses on financing agricultural and rural development, not on providing general liquidity to the commercial banking sector.
• SBI (State Bank of India): As a major commercial bank, SBI actively participates in the interbank market, lending funds to other banks facing temporary liquidity shortages. This makes it a significant provider of funds within the banking system, fitting the description of an 'intermediate' lender.
• None of the above: This is incorrect as one of the options fits the description.

Conclusion on Lender Role

In the context of providing liquidity and acting as a lender between banks, major commercial banks like the SBI often fulfill the role of an ‘lender of intermediate resort’ by facilitating funds in the interbank market.