"Commercial Banks are the lender of the last resort." Justify for or against.

Against the statement — Commercial banks are NOT the lender of the last resort.

Justification:

1. Central bank is lender of last resort — It is the central bank, not the commercial banks, that is called the lender of last resort. When a commercial bank is in need of funds, it can obtain loans and rediscount its bills with the central bank.

2. Commercial banks borrow from central bank — Commercial banks themselves borrow from the central bank in times of need, which clearly shows that they are not the last resort.

3. Function of central bank — The central bank acts as banker's bank, keeping cash reserves of commercial banks and providing them with finance whenever required.

Hence, the statement is incorrect — it is the central bank, not commercial banks, that is the lender of last resort.