Question : ___________ is known as lender of last resort
Option 1: RBI
Option 2: Ministry of Finance
Option 3: Department of Revenue
Option 4: Central Bank of India
Correct Answer: RBI
Solution : The correct answer is (a). RBI
The Reserve Bank of India (RBI) is commonly known as the lender of last resort. As the central bank of India, the RBI plays a crucial role in maintaining stability and confidence in the financial system. One of the key functions of the RBI is to act as a lender of last resort to banks and other financial institutions.
By providing liquidity to banks, the RBI helps ensure that they can meet their payment obligations, maintain confidence, and avoid panic or contagion effects. The lender of last resort function is an important tool in managing financial crises and ensuring the smooth functioning of the banking sector.
