Match List - I with List - II.
| List – I | List – II |
| Banking | Function |
| (A) Commercial Bank | (I) Long term lending rate by RBI |
| (B) Reserve Bank of India | (II) Short term lending rate by RBI |
| (C) Bank Rate | (III) Credit creation |
| (D) Repo Rate | (IV) Lender of last resort |
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 2
The correct answer is Option 2: (A) - (III), (B) - (IV), (C) - (I), (D) - (II)
| List – I | List – II |
| Banking | Function |
| (A) Commercial Bank | (III) Credit creation |
| (B) Reserve Bank of India | (IV) Lender of last resort |
| (C) Bank Rate | (I) Long term lending rate by RBI |
| (D) Repo Rate | (II) Short term lending rate by RBI |
Commercial bank helps in the credit creating of money, whereas, RBI i.e. Reserve Bank of India acts as custodian of cash reserve, provides centralized clearing, and is the lender of last resort. Bank rate is the lending rate at which commercial banks can borrow from the RBI without providing any security. Whereas, the repo rate is the rate of interest charged by the central bank to commercial banks for a short period.