WBCS.LIVE practice question

Which institution is known as the "Lender of the Last Resort" in India?

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

Answer options

  1. SBI
  2. NABARD
  3. RBI
  4. SIDBI

Correct answer and explanation

Correct answer: RBI

Explanation: āœ… Correct Answer: C) RBI šŸ“š Explanation: The Reserve Bank of India (RBI) acts as the "Lender of the Last Resort" for commercial banks that face a liquidity crisis. When a bank is unable to raise funds from other sources, the RBI provides it with emergency loans to prevent its failure and protect the financial system. This function is crucial for maintaining public confidence in the banking sector.