Explain the role of the Reserve Bank of India as the "Lender of last r

1.	Explain the role of the Reserve Bank of India as the "Lender of last resort".
Answer» The Central Bank issues loans to a Commercial Bank against specified and approach securities of the bank. In this way, the Central Bank ensures the smooth functioning of Commercial Banks and appropriate flow of credit in the economy. By offering loans to the Cornrnercial Banks in situation of emergency the Central Bank ensures that the banking system of the country does not suffer any set back and that money market remains stable. Due to the above-stated reasons, the Central Bank is termed as "Lender of Last Resort".

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Explain the role of the Reserve Bank of India as the "Lender of last resort".

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