Consider the following statements:
- Bank run is a situation which occurs when a large number of depositors start withdrawing their money from bank at the same time which leads to bank failure.
- Bank rate is the interest rate charged by the RBI for short-term loans that it gives to the Commercial banks.
Which of the above statement(s) is/are correct?
Correct answer: A
Explanation
Statement 1 correctly describes a bank run, where a large number of depositors rush to withdraw funds at the same time, which can push a bank toward failure. Statement 2 is wrong because the bank rate is the rate at which the RBI lends to commercial banks for long-term loans without collateral; the rate for short-term lending is the repo rate.