BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Interest rate at which Commercial Banks accept deposits from the public.
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Rate at which Central Bank rediscounts bills of exchange of Commercial Banks.
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Prime Lending Rate of Commercial Banks
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Interest rate at which Commercial Banks lend to the customers
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Detailed explanation-1: -Bank rate is the rate charged on the loans offered by the Central bank to the commercial banks without any collateral. It is also considered as the rate at which the central bank discounts the bills of the commercial banks.
Detailed explanation-2: -discount rate, also called rediscount rate, or bank rate, interest rate charged by a central bank for loans of reserve funds to commercial banks and other financial intermediaries.
Detailed explanation-3: -Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be. Bank Rate and Repo Rate seem to be similar terms because in both of them RBI lends to the banks.
Detailed explanation-4: -Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be. When RBI increases the bank rate, the cost of borrowing for banks rises and this credit volume gets reduced leading to decline in supply of money.
Detailed explanation-5: -Repo Rate: It is the interest rate at which the central bank of a country lends money to commercial banks.