Explain the lender of last resort' function of the Central Bank

cbse-class-12

#1

Explain the lender of last resort’ function of the Central Bank.
or
What role of RBI is known as 'lender of last resort?


#2

It means that if a commercial bank fails to get financial accommodation from anywhere, it approaches the Central Bank as a last resort. Central Bank advances loan to such banks against approved securities. By offering loan to the commercial bank in situations of emergency, the Central Bank ensures that:
(i) The banking system of the country does not suffer from any set back.
(ii) Money market remains stable.