BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
It has to meet the credit need of citizens to whom no one else is willing to lend
|
|
|
Banks lend to go to RBI as a last resort
|
|
|
It comes to help banks in times of crisis
|
|
|
None of these
|
Detailed explanation-1: -As a Banker to Banks, the Reserve Bank also acts as the ‘lender of the last resort’. It can come to the rescue of a bank that is solvent but faces temporary liquidity problems by supplying it with much needed liquidity when no one else is willing to extend credit to that bank.
Detailed explanation-2: -In India RBI is referred to as the lender of last resort. Reserve Bank of India is the central bank of India. At the time of liquidity crisis faced by the commercial banks, RBI gives loans to the commercial banks to meet their financial crisis and thus, it acts as a lender of last resort.
Detailed explanation-3: -In India, RBI (Reserve Bank of India) is the central bank and saves commercial banks from bankruptcy. Due to this reason, RBI is known as the lender of last resort.