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Explain the "Lender of Last Resort" function of Central Bank.

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In emergency situations, when a Commercial Bank fails to accommodate its financial requirement, the Central Bank acts as the "Lender of Last Resort." The Central Rank issues loans to a Commercial. Bank against specified and approach securities of the bank. In this way, the Central Bank ensures the smooth functioning of Commercial Banks and appropriate flow of credit in the economy. Due to the above stated reasons, the Central Bank is termed as "Lender of Last resort”.

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