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      Question

      Section 49 of the RBI Act, 1934 requires the Bank to

      make public from time to time the standard rate at which it is prepared to do what?
      A Accept deposits from scheduled banks Correct Answer Incorrect Answer
      B Sell foreign exchange to authorised persons Correct Answer Incorrect Answer
      C Lend to the Central Government Correct Answer Incorrect Answer
      D Issue new bank notes Correct Answer Incorrect Answer
      E Buy or re-discount bills of exchange or other commercial paper Correct Answer Incorrect Answer

      Solution

      Section 49 provides that the Bank shall make public from time to time the standard rate at which it is prepared to buy or re-discount bills of exchange or other commercial paper eligible for purchase under the Act. This standard rate is known as the bank rate, which serves as a benchmark for the cost of central bank accommodation. The activity referred to in the definition of the bank rate is buying or re-discounting eligible bills or commercial paper.

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