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What is meant by Bank Rate?
Question

What is meant by Bank Rate?

A.

Long-term rate at which bank lends to RBI

B.

Long-term rate at which RBI lends to bank

C.

Long-term rate at which Government lends to bank

D.

Long-term rate at which bank provides loans to customers

Correct option is B

Ans. (b) Long-term rate at which RBI lends to bank
Sol.
The Bank Rate is the interest rate at which the Reserve Bank of India (RBI) lends money to commercial banks without any collateral for long-term purposes.
It is a tool used by RBI to control inflation and regulate liquidity in the economy.

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