Discussion
The lending rates of commercial banks are usually :
Answer: D
Commercial banks' lending rates are usually higher than the bank rate.
The bank rate is the rate at which the central bank lends to or rediscounts bills for commercial banks. It is the cost at which banks can obtain funds from the RBI, so banks lend to their customers at a margin above it to cover their costs, risk and profit. When the bank rate rises, lending rates generally rise too.
For the same reason lending rates are not lower than the bank rate, and they are not unrelated to or unaffected by it, since the bank rate is a signal and a cost that feeds through to the rates banks charge.
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