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How Bank rates control the credit

How Bank rates control the credit?

Answer: Bank rate is the rate of interest at which the Central bank lends to Commercial banks. By increasing the bank rate central bank increases the cost of borrowing. It forces the Commercial banks to increase in turn the rate of interest from public. Since lending rate increases, demand for loan for investment and other aims fall.

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  • Q : How Bank rates control the credit How

    How Bank rates control the credit? Answer: Bank rate is the rate of interest at which the Central bank lends to Commercial banks. By increasing the bank rate centra