WBCS.LIVE practice question

In the Indian Economy, which institution is known as the 'Lender of Last Resort'?

Solve this multiple-choice question and check the correct answer with its explanation below.

Answer options

  1. State Bank of India
  2. Ministry of Finance
  3. Reserve Bank of India
  4. World Bank

Correct answer and explanation

Correct answer: Reserve Bank of India

Explanation: āœ… Correct Answer: C) Reserve Bank of India šŸ“š Explanation: As the central bank, the RBI acts as the lender of last resort by providing liquidity to commercial banks facing financial crises or severe cash shortages. This function ensures the stability of the banking system and prevents bank runs. It is one of the most critical roles of any central bank globally.