Question

The bank rate refers to ______.

Options

• The maximum rate at which commercial banks lend to the public

• The minimum rate at which the RBI lends to commercial banks or rediscounts approved bills

• The rate at which banks borrow from each other overnight

• The interest rate paid by banks on savings deposits

Answer 1

The bank rate refers to the minimum rate at which the RBI lends to commercial banks or rediscounts approved bills.

Explanation: 

Bank rate is the minimum rate of interest at which the RBI lends money to commercial banks or rediscounts their approved bills and government securities.