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1. Banks borrow from / lend to each other in the inter-bank market. True or False

1. Banks borrow from / lend to each other in the inter-bank market. True or False

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Answer #1

ANSWER

CORRECT ANSWER TRUE

EXPLANATION

  • The whole purpose behind the setup of Inter-Bank Market is basically Short-term Borrowings and Lendings by Banks from each other.
  • The aim is to fulfill the Short-term Finance needs of the Banks on urgent basis.
  • Such Borrowings and Lending takes place at the Bank's own terms and Interest Rate charged by the Lending Banks from the Borrowing Banks are know as "Inter-Bank Rates".
  • In simple terms we can say that its a Market where on Bank-to-Banks transactions takes place.
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