HSC Commerce (Marketing and Salesmanship) 12th Board ExamMaharashtra State Board
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Give Reasons Or Explain the Following Central Bank Acts as a Lender of the Last Resort of Commercial Banks. - HSC Commerce (Marketing and Salesmanship) 12th Board Exam - Economics

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Question

Give reasons or explain the following 

Central bank acts as a lender of the last resort of commercial banks.

Solution

A central bank is the apex financial institution which performs various important functions such as being the lender of last resort. As the lender of last resort, the central bank is under the obligation to provide funds against securities to the commercial banks as and when needed by them. Thus, by helping the commercial banks in the situation of crisis, the central bank acts as the lender of last resort.

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APPEARS IN

 2013-2014 (March) (with solutions)
Question 2.2.6 | 2.00 marks
Solution Give Reasons Or Explain the Following Central Bank Acts as a Lender of the Last Resort of Commercial Banks. Concept: Monetary Function of Central Bank.
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