Which RBI operation defines the Bank Rate under section 49 of the Reserve Bank of India Act, 1934?
The Bank Rate is the standard rate the RBI publishes for buying or rediscounting eligible bills of exchange or other commercial paper. The policy repo, Standing Deposit…
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Which RBI operation defines the Bank Rate under section 49 of the Reserve Bank of India Act, 1934?
Answer and explanation
Correct answer D
The Bank Rate is the standard rate the RBI publishes for buying or rediscounting eligible bills of exchange or other commercial paper. The policy repo, Standing Deposit Facility and Marginal Standing Facility have separate operating definitions.
Option feedback
Option A
The policy repo rate applies to liquidity provided against eligible collateral under the liquidity adjustment facility.
Option B
The Standing Deposit Facility rate applies to uncollateralised overnight deposits accepted by the RBI.
Option C
The Marginal Standing Facility rate applies to the overnight borrowing facility for eligible banks. The question asks for the statutory definition of the Bank Rate.
Option D
Section 49 identifies the RBI’s standard rate for buying or rediscounting bills of exchange or other commercial paper eligible for purchase under the Act.
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