Q:
The banks avail long-term loans from Reserve Bank of India (RBI) by putting no collateral securities. This loan is availed under which of the following lending rates?
Answer & Explanation
Answer: A) Bank rate
Explanation: The bank rateis the rate of interest at which banks takelong term loansfrom Reserve Bank of India (RBI) by putting no collateral security. It is the rate at which RBI rediscounts the bills of exchange and government securities held by the commercial banks. For controlling the credit, inflation and money supply, RBI increases the bank rate.
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