(i) It is the
rate at which central bank (RBI) lends money to commercial banks by discounting
bills of exchange.
(ii) It acts as
a guide line to the banks for fixing interest rates. If bank rate increases,
interest rate wills goes up, and vice-versa.
(iii) The bank
rate is decided by the Central Bank. In April 2010, the bank rate was
maintained at 6% p.a