ECONOMICS
MONEY
|
Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
|
|
|
Commercial bank
|
|
|
Agricultural bank
|
|
|
Central bank
|
|
|
None of the above
|
Detailed explanation-1: -As a Banker to Banks, the Reserve Bank also acts as the ‘lender of the last resort’.
Detailed explanation-2: -The central bank is called the lender of last resort because it is capable of lending–and to prevent failures of solvent banks must lend–in periods when no other lender is either capable of lending or willing to lend in sufficient volume to prevent or end a financial panic.
Detailed explanation-3: -In India, RBI is the lender of last resort.
Detailed explanation-4: -In situations like that, central banks act as the lender of last resort. Central banks have traditionally held this role because they are primarily the ones responsible for ensuring that financial markets function smoothly and the financial system is stable.
Detailed explanation-5: -RBI as the lender of first resort.