Economics • Banking & FinanceEasy
Which institution in India acts as the lender of last resort for scheduled commercial banks?
A. State Bank of India
B. Ministry of Finance
C. Reserve Bank of India✓ Correct Answer
D. National Bank for Agriculture and Rural Development
💡 Solution & Explanation
The Reserve Bank of India acts as the ultimate lender of last resort, providing emergency financial accommodation and liquidity support to scheduled commercial banks experiencing acute cash drains to prevent systemic collapse. Specialized institutions like NABARD cater specifically to agricultural refinance rather than functioning as central monetary authorities. This lender-of-last-resort function is a core attribute of central banks globally to maintain financial stability.
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