BANKING AFFAIRS

Detailed explanation-1: -One of the most effective instruments of monetary policy is the bank rate. A bank rate is essentially the rate at which the RBI lends money to commercial banks without any security or collateral. It is also the standard rate at which the RBI will buy or discount bills of exchange and other such commercial instruments.

Detailed explanation-2: -The main instruments of the monetary policy are Cash Reserve Ratio, Statutory Liquidity Ratio, Bank Rate, Repo Rate, Reverse Repo Rate, and Open Market Operations.

Detailed explanation-3: -Monetary policy is a set of actions to control a nation’s overall money supply and achieve economic growth. Monetary policy strategies include revising interest rates and changing bank reserve requirements. Monetary policy is commonly classified as either expansionary or contractionary.

Detailed explanation-4: -In simpler words, the 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 single agreement on repurchase that will be drawn up or agreed upon with no collateral as well.