Bank rate , also referred to as the discount rate in American English, is the rate of interest which a central bank charges on the loans and advances to a commercial bank. The bank rate is known by a number of different terms depending on the country and has changed over time in some countries as the mechanism used to manage the rate have changed.

Question

Bank rate is

A The minimum rate set by the Reserve Bank of India below which banks are not allowed to lend to its customer

B The rate at which the central bank of a country (Reserve Bank of India in case of India) lends money to commercial banks in the event of any shortfall of funds.

C The rate at which RBI borrows money from the commercial banks.

D The rate of interest which a central bank charges on the loans and advances to a commercial bank.

E None of these

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Bank rate is

Solution