Question
Download Solution PDFThe rate at which the Reserve Bank is ready to buy or rediscount bills of exchange or other commercial papers is called the ______.
Answer (Detailed Solution Below)
Detailed Solution
Download Solution PDFThe correct answer is Bank Rate.Key Points
- Bank Rate is the rate at which the Reserve Bank of India (RBI) is ready to buy or rediscount bills of exchange or other commercial papers from commercial banks or financial institutions.
- The Bank Rate is used by the RBI to control the money supply in the economy and to stabilize the inflation rate.
- The Bank Rate is also known as the Discount Rate, and it is the highest rate at which the RBI lends money to commercial banks.
- The other options mentioned in the question are also important tools used by the RBI to regulate the economy.
Additional Information
- Cash Reserve Ratio (CRR) is the percentage of deposits that banks have to maintain with the RBI.
- Repo Rate and Reverse Repo Rate are the rates at which banks borrow money from or lend money to the RBI, respectively.
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