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Question
The central bank settles the claims of commercial banks is called ______.
Options
Banking facility
Ledger facility
Clearing House facility
Accounts facility
Solution
The central bank settles the claims of commercial banks is called Clearing House facility.
Explanation:
The Clearing House Facility is a mechanism set up by the Central Bank to oversee the settlement of transactions among Commercial Banks. This facility ensures the accurate clearing of balances by reconciling interbank transfers. It is crucial for maintaining the efficiency of the banking system by simplifying the process of clearing cheques and facilitating interbank payments.
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