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Question
State with reason whether you agree or disagree with the following statement.
A co-operative bank acts as a lender of the last resort.
Solution
No, the given statement is not correct. This is because it is the Central Bank that acts as the lender of last resort for the commercial banks and the government. When a commercial bank faces financial crisis and fails to obtain funds from other sources, the central bank plays the vital role of ‘lender of last resort’ and provides them with financial assistance in the form of credit.
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