Answer :

When a commercial bank faces financial crisis and fails to obtain funds from other sources then the central bank plays a vital role of lender of last resort. It provides the financial assistance in form of credit. This role of Central Bank saves the commercial bank from bankruptcy. Thus the central bank plays the role of guarantor for the commercial banks and maintains sound and healthy banking system in the economy.

Through this role, the central bank ensures that

The banking system of the country does not suffer from any setback

The money market remains stable

Rate this question :

How useful is this solution?
We strive to provide quality solutions. Please rate us to serve you better.
Try our Mini CourseMaster Important Topics in 7 DaysLearn from IITians, NITians, Doctors & Academic Experts
Dedicated counsellor for each student
24X7 Doubt Resolution
Daily Report Card
Detailed Performance Evaluation
view all courses

Explain how 'ReveEconomics - Board Papers

Explain the role Economics - Board Papers

Explain howEconomics - Board Papers

Explain theEconomics - Board Papers