Bank rate means
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rate of interest charged by commercial banks from borrowers
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rate of interest at which commercial banks discount bills of their borrowers
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rate of interest allowed by commercial banks on their deposits
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rate at which RBI purchases or rediscounts bills of exchange of commercial banks
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None of these
Reveal answer
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D
Correct answer
Explanation
Bank rate is the rate at which the Central Bank (RBI) is willing to buy or rediscount bills of exchange and other commercial papers from commercial banks. It is a benchmark rate that signals the stance of monetary policy. It is different from the rate commercial banks charge borrowers (lending rate) or pay on deposits (deposit rate).