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What is a bank rate ?
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- Rate at which Central bank of a country advances loans to other banks in the country
- Rate at which banks advance loans to the customers
- Rate at which banks lend among themselves
- Rate at which banks lend to money lenders
- Rate at which Central bank of a country advances loans to other banks in the country
Correct Option: A
Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial/cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate.
