The lowering of Bank Rate by the Reserve Bank of India leads to

[UPSC Civil Services Exam – 2011 Prelims]

(a) More liquidity in the market

(b) Less liquidity in the market

(c) No change in the liquidity in the market

(d) Mobilization of more deposits by commercial banks


Answer: (a)        

Explanation:

  • Bank Rate
    • It is the interest rate at which a nation’s central bank lends money to domestic banks, often in the form of very short-term loans.
    • When a bank suffers fund deficiency, it can borrow money from RBI to continue services.
    • When Bank Rate is increased by the central bank, a commercial bank’s borrowing costs hikes, which reduce the supply of money in the market.
  • Any reduction in the bank rate and the repo rate will lead to borrowers getting loans at lower interest rates.
  • The lowering of the Bank Rate makes the domestic banks borrow money at a cheap rate which in turn increased the liquidity in the market.

Consider the following statements:                                                                   The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

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Consider the following statements:                                                         The Parliament of India can place a particular law in the Ninth Schedule of the Constitution of India. The validity of a law placed in the Ninth Schedule cannot be examined by any court and no judgement can be made on it. Which of the statements given above is/are correct?

Consider the following statements:                                               

Read More »

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