Question

The Reserve Bank of India acts as the "Lender of Last Resort". What does this specific function imply?

As the lender of last resort, the RBI prevents the collapse of the banking system by providing emergency liquidity to solvent but illiquid banks.

A It lends money to the Central Government for infrastructure projects.

B It provides loans to retail customers when commercial banks refuse them.

C It provides liquidity to commercial banks when they face a severe financial crisis and cannot raise funds from any other source.

D It acts as the final guarantor for foreign institutional investments.

E It funds Non-Banking Financial Companies (NBFCs) exclusively during bankruptcies.

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