Suppose all the customers of a commercial bank demand for their deposits at the same time then how does central bank help to commercial bank in this situation.
As banker to the banks, the central bank acts as the lender of the last resort.
In other words, in case the commercial banks fail to meet their financial requirements from other sources, they can, as a last resort, approach to the central bank for loans and advances.
The central bank assists such banks through discounting of approved securities and bills of exchange.
Value: Analytic
