Q75. In India, the central bank’s function as the ‘lender of last resort’ usually refers to which of the following?
- Lending to trade and industry bodies when they fail to borrow from other sources
- Providing liquidity to the banks having a temporary crisis
- Lending to governments to finance budgetary deficits
Select the correct answer using the code given below.
a) 1 and 2
b) 2 only
c) 2 and 3 only
d) 3 only
Answer: (b)
- A lender of last resort (LoR) is an institution, usually, a country’s central bank, which offers loans to banks or other eligible institutions that are experiencing financial difficulty or are considered highly risky or near collapse.
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