Assertion (A): RBI acts as lender of last resort
Assertion (A): RBI acts as lender of last resort.
Reason (R): Commercial Banks approach the central bank to give loans and advances in case of a financial emergency.
Alternatives:
(a) Both Assertion (A) and Reason (R) are True and Reason (R) is the correct explanation of Assertion (A).
(b) Both Assertion (A) and Reason (R) are True and Reason (R) is not the correct explanation of Assertion (A).
(c) Assertion (A) is True but Reason (R) is False
(d) Assertion (A) is False but Reason (R) is True
Anurag Pathak Changed status to publish January 5, 2024
Ans – (a)
Explanation:-
Lender of the Last Resort:- When commercial banks fail to meet their financial requirements from other sources, i.e., in case of a financial emergency, they approach the central bank to give loans and advances as lender of the last resort. Central Bank assists these banks through discounting of approved securities and bills of exchange.
Thus Assertion (A) is and Reason (R) is correct and Reason (R) is the correct explanation of Assertion (A).
Anurag Pathak Changed status to publish January 5, 2024
