SSC GD 2023 PYQ — Question 33

The correct answer is Option 2 i.e. Central bank lends loan to commercial banks.

• The term "bank rate" refers to the interest rate at which a central bank lends money to commercial banks. 
• This rate is set by the central bank and is a crucial tool for implementing monetary policy. 
• When the central bank raises the bank rate, borrowing becomes more expensive for commercial banks, leading to higher interest rates for consumers and businesses.