BANKING GENERAL KNOWLEDGE
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Rate of interest charged by commercial banks from borrowers
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Rate of interest at which commercial banks discounted bills of their borrowers
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Rate of interest allowed by commercial banks on their deposits
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Rate at which RBI purchases or rediscounts bills of exchange of commercial banks
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Detailed explanation-1: -Notes: Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills.
Detailed explanation-2: -Bank Rate is the rate at which central bank discounts the bills of commercial banks.
Detailed explanation-3: -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-4: -The term “rediscount” also refers to the process by which a central bank or the Federal Reserve (Fed) discounts a note that has already been discounted by a bank or discount house.
Detailed explanation-5: -Rediscount means exchanging (rediscounting) securities against a price that had already been exchanged (discounted) before. The CBRT may accept commercial bills and documents to be presented by banks for rediscount, provided that they bear at least three signatures of solvent persons.