BANKING GENERAL KNOWLEDGE
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Rate of interest charged by commercial banks from borrowers
|
|
|
Rate of interest at which commercial banks discounted bills of their borrowers
|
|
|
Rate of interest allowed by commercial banks on their deposits
|
|
|
Rate at which RBI purchases or rediscounts bills of exchange of commercial banks
|
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: -What Is a Rediscount? A rediscount occurs when a short-term negotiable debt instrument is discounted for a second time. The reason an issuer would do this is to spark demand for loans when investor interest dries up. When liquidity in the market is low, banks can thus try to raise capital by rediscounting.
Detailed explanation-4: -What is a Bank Rate? Bank rate is a rate at which the Reserve Bank of India (RBI) provides the loan to commercial banks without keeping any security. There is no agreement on repurchase that will be drawn up or agreed upon with no collateral as well. The RBI allows short-term loans with the presence of collateral.
Detailed explanation-5: -Bank rate is the rate at which RBI rediscounts first class bills of exchange or commercial bills submitted by banks.