what is bank rate and what is interest rate ?

Differentiate .....

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4 Answers
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  • bank rate the rate of discount set by central bank and interest rate the proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding. "reduced interest rates encourage people to spend money on home improvements"
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  • asdifferen
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  • Bank rate is the interest rate at which RBI lends the money to the banks for a longer duration.Bank Rate refers to the official interest rate at which RBI will provide loans to the banking system which includes commercial / cooperative banks, development banks etc. Such loans are given out either by direct lending or by rediscounting (buying back) the bills of commercial banks and treasury bills. Thus, bank rate is also known as discount rate. Bank rate is used as a signal by the RBI to the commercial banks on RBI’s thinking of what the interest rates should be.
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