The minimum charge at which the Central Bank lend to commercial banks is called?
Answer Details
The minimum charge at which the Central Bank lends to commercial banks is called the bank rate. The bank rate is the rate at which the Central Bank provides loans to commercial banks to meet their short-term fund requirements. The bank rate serves as a benchmark rate for the entire financial system and influences other interest rates in the economy, including lending rates charged by commercial banks to their customers. A change in the bank rate has a significant impact on the cost of borrowing and lending, money supply, and inflation.