alleryStart learning →The RBI is described as the 'lender of last resort' because it
Alends exclusively to exporters
Blends to banks whenever they need funds
Clends only to the central government
Dlends to the public directly
Answer & Solution
Correct answer: B. lends to banks whenever they need funds
1. Commercial banks sometimes need funds beyond what the market supplies.
2. The central bank stands ready to lend to them at all times.
3. That standing readiness is why it is called the **lender of last resort**.
4. The RBI does not lend directly to the public, which rules out that option.
_Source: syllabus Introductory Macroeconomics, Ch 3 "Money and Banking", section 3.4 POLICY TOOLS TO CONTROL MONEY SUPPLY_
Keep practising Awards
Browse all Awards questions for IBPS Clerk, or explore more Banking Awareness topics.
Related questions