Question

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

पर्याय

• When a commercial bank faces a financial crisis and fails to obtain funds from others. sources, then the central bank plays the vital role of 'lender of last resort' and provides them with financial assistance in the form of credit.

• This role of the central bank saves the commercial bank from bankruptcy.

• Both When a commercial bank faces a financial crisis and fails to obtain funds from others. sources, then the central bank plays the vital role of 'lender of last resort' and provides them with financial assistance in the form of credit. and this role of the central bank saves the commercial bank from bankruptcy.

• None of the above

Answer 1

None of the above

Explanation

When a commercial bank is faced with a financial crisis and is unable to secure funds from other sources, the central bank steps in as a "lender of last resort," providing financial assistance in the form of credit. The central bank's role saves the commercial bank from failure. As a result, the central bank acts as a guarantor for commercial banks, ensuring that the financial system remains sound and healthy.