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What role of RBI is known as lender of l...

What role of RBI is known as lender of last resort?

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This function of the central bank is regarded as the basic important function of central banking system. The central bank acts as a lender of the last resort for commerical bannks .When commerical banks fail to meet obligations of their depositors the central bank hepls them .The central bank advances rquired credit against approved securities .It gives financial accommodation to commerical banks
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What role of RBI is know as 'lender of last resort'? Hint : When commercial banks fail to meet their financial requirements from other sources, they approach the central bank, which gives loans and advances as lender of the last resort. If commercial banks have insufficient reserves to meet any financial obligation, then in order to avoid financial panic, there must be a guarantee that banks can get cash if they really need it. Central Bank is the only institution that performs the role of lender of last resort.

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