The lender of last resort is a function of a) Rural Bank b) Post office c) Central Bank d) Commercial bank

Understanding the Concept

The term "lender of last resort" refers to an institution that offers loans to banks or other financial institutions that are experiencing financial difficulty or are considered highly risky. This function is critical for maintaining stability in the financial system, particularly in times of crisis.

Analyzing the Options

1. Rural Bank: Generally serve the agricultural sector and do not have the extensive reach or resources to act as a lender of last resort.
2. Post Office: While they offer banking services in some regions, they do not function as a central authority that can provide emergency funds to the broader financial system.
3. Central Bank: This is the primary institution designed to act as a lender of last resort. Central banks have the authority to provide liquidity to banks to prevent systemic failures.
4. Commercial Bank: These are profit-oriented institutions that do not have the mandate or the capability to serve as a lender of last resort.

Conclusion

Based on the analysis of the functions of each option, the correct answer is:

Final Answer

c) Central Bank