Central bank is the lender of last resort.

The schedule banks are conducting their activities with the help and guidelines of the central bank. Central bank provides money to the scheduled banks when they fall in liquidity problem. The central bank helps the commercial banks through following ways-
a. Bill discounting: the central bank extents financial accommodation mainly through resident of first class bills of exchange, government’s securities and their eligible papers.
b. Sanctioning loans
c. Purchasing bank certificate
d. Purchasing bond and securities
e. Purchasing treasury bill
So prof. Howtrey said, “central bank is the lender of last resort.”