Question : What is the bank rate?
Option 1: The rate at which the Central bank of a country advances loans to other banks in the country.
Option 2: The rate at which banks advance loans to customers.
Option 3: The rate at which banks lend among themselves.
Option 4: The rate at which banks lend to money lenders.
Correct Answer: The rate at which the Central bank of a country advances loans to other banks in the country.
Solution : The correct option is the Rate at which the Central bank of a country advances loans to other banks in the country .
The rate at which a central bank like RBI loans money to commercial banks and other financial institutions is known as the bank rate. When a central bank raises the bank rate, commercial banks must pay more to borrow money from the central bank. Commercial banks might, therefore, increase the interest rates they impose on consumer loans as a result.
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