What does the term ‘bank rate’ refer to?

Correct option is B

The correct answer is (b) Rate of interest charged by a central bank on its loans to a commercial bank.
· The bank rate is the rate of interest at which a nation's central bank lends money to domestic banks, often in the form of very short-term loans.
· It is a tool used by the central bank to control the money supply, inflation, and overall economic stability.
· Changes in the bank rate can influence other interest rates in the economy, including the rates at which banks lend to consumers and businesses.
Information Booster:
· Rate of interest charged by a scheduled commercial bank on its loans to a private sector bank: This is not typically referred to as the bank rate; interbank lending rates are usually known as interbank offered rates.
· Rate of interest charged by a private sector bank on its loans to a commercial bank: This also does not pertain to the bank rate; such transactions would occur at negotiated rates between the banks involved.
· Rate of interest charged by a non-scheduled bank on its loans to individuals: This is typically referred to as the lending rate or interest rate on personal loans, not the bank rate.