Ans – (d)
Bank Rate is a Quantitative method of the Monetary policy of the RBI to control the money supply.
Monetary Policy is the measure taken by the Reserve Bank of India to control the money supply or credit creation.
It comprises different quantitative and qualitative measures.
One of the quantitative measures is the bank rate as it affects the money supply of all the sectors in the economy.
Bank Rate (Discount Rate): The bank rate is the rate at which the central bank of a country lends money to commercial banks to meet their long-term needs.
RBI uses bank rates to control credit.
An increase in Bank rate increases the cost of borrowing from the central bank, which leads to an increase in lending rates by commercial banks.
It discourages borrowers from taking loans, which reduces the ability of commercial banks to create credit.