In banking terminology, which of the following rates is charged by commercial banks to their most creditworthy and financially sound customers?

Introduction / Context:
Different interest rates exist in the financial system, each with a specific meaning. Questions in banking awareness frequently ask about the definitions of these rates. This question focuses on the rate that commercial banks charge to their most creditworthy customers, usually large and financially strong borrowers. Understanding this term helps in interpreting lending practices and credit risk.

Given Data / Assumptions:
- Four rates are mentioned: Prime Lending Rate, Statutory Liquidity Rate, Bank Rate and Repo Rate.
- The question specifies that the rate is charged by banks to their most creditworthy customers.
- We assume standard usage in commercial banking and exam oriented terminology.

Concept / Approach:
Prime Lending Rate, often shortened to PLR or now replaced by similar benchmarks, is the interest rate that banks quote for their most reliable corporate borrowers. Other loans are often priced at a spread above or below this prime rate depending on risk. Statutory Liquidity Ratio is a regulatory ratio, not a lending rate. Bank Rate is the rate at which the central bank lends to commercial banks for long term, and Repo Rate is the short term policy rate at which the central bank lends to banks against government securities. Therefore only Prime Lending Rate matches the description given.

Step-by-Step Solution:
Step 1: Prime Lending Rate is defined as the benchmark interest rate that a bank charges to its most creditworthy borrowers. These borrowers are considered low risk, so they receive the lowest standard lending rate.Step 2: Statutory Liquidity Rate is not a lending rate at all. It is related to the Statutory Liquidity Ratio, which is the proportion of deposits that banks must maintain in liquid assets. It does not describe the price charged to borrowers.Step 3: Bank Rate is the rate at which the central bank provides long term funds to commercial banks. It influences the cost of funds for banks, but it is not directly the rate charged to the bank's customers.Step 4: Repo Rate is the rate at which the central bank lends to commercial banks for short terms against the security of government bonds. Again, it is a policy rate, not the final customer lending rate described in the question.

Verification / Alternative check:
A quick way to verify is to remember that the word prime here refers to prime or top quality borrowers. Banks may set their lending rate structures with reference to PLR or similar external benchmarks. Regulators, on the other hand, talk about Statutory Liquidity Ratio, Bank Rate and Repo Rate in the context of monetary policy and prudential norms. This separation confirms that only the Prime Lending Rate is directly defined in terms of the bank's best customers.

Why Other Options Are Wrong:
Statutory Liquidity Rate is wrong because it confuses a regulatory requirement with a lending rate. Bank Rate is wrong because it is a central bank rate, not a retail customer rate. Repo Rate is wrong for the same reason; it is a policy instrument that affects money market conditions rather than being the direct rate for top borrowers.

Common Pitfalls:
Some candidates mix up Bank Rate or Repo Rate with the rate banks charge borrowers because they all involve interest. Others misread Statutory Liquidity Rate as some sort of lending rate. Carefully distinguishing between central bank policy rates, regulatory ratios and commercial lending benchmarks helps to avoid this confusion.

Final Answer:
The rate charged by banks to their most creditworthy customers is the Prime Lending Rate.