Question: Identify the missing number in the sequence: 5, ?, 25, 25, 125, 5, 625 (IFFCO 2022)
Options:
The rate at which banks borrows money from its subsidiary
The rate at which banks rediscounts bills with RBI
The rate at which banks lends money to its subsidiary
None of these
The bank rate is the interest rate at which a central bank, like the Reserve Bank of India (RBI), lends money to commercial banks.
🔑Key Points:
-Managing the bank rate is a method by which RBI affects economic activity.
-Bank Rate: It is also called the rediscount rate. It is the rate, at which the RBI gives finance to commercial banks.
-The bank rate is monitored by RBI to ensure profitability for the banks.
-An increase in bank rate will lead to a decrease in money supply as the lending rate will be increased for credit to borrowers.
-Due to a decrease in bank rate, it becomes cheaper for banks to take loans from the Reserve Bank and hence the banks reduce the interest rates so that the maximum amount can be given as a loan.Â