The RBI can influence money supply by changing the rate at which it gives long term loans to the commercial banks. This rate is called?

Bank rate.

The correct answer is Option (4) → Bank rate

The Bank Rate is the rate at which the Reserve Bank of India (RBI) provides long-term loans to commercial banks and other financial institutions. By changing the bank rate, the RBI influences the cost of borrowing for commercial banks, which in turn affects:

• The credit availability in the economy, and

• The overall money supply.

Thus, when the bank rate is increased, borrowing becomes costlier → money supply decreases;
when it is reduced, borrowing becomes cheaper → money supply increases.

The Repo rate is the rate at which the RBI provides short-term loans to commercial banks against the collateral of government securities. It is the primary tool used today to manage liquidity in the banking system.