The primary or secondary credit comes under discount lending. There is a regular discount rate put by the Feds for non-emergency loans to banks that supply agricultural and other communities where credit demand is quite seasonal.<\/p>\n

Depository institutions and commercial banks that generally have a good financial condition are eligible to borrow from their regional Fed banks at a primary credit rate. <\/p>

These rates are referred to as discount rates. Funds for commercial banks that are rented from the Fed are processed in the course of the discount window, and the rate is reviewed every 14 days.<\/p>\n

Banks that are in financial trouble and are going through severe liquidity problems are given secondary credit. <\/p>

The interest rate on secondary credit by the central bank is usually set at 50 basis points which are 0.5 % points above the discount rate. <\/p>

The interest rate on these loans is set at a superior penalty rate to show the not-so-good situation of these borrowers.<\/p>\t\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/div>\n\t\t\t\t\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t<\/section>\n\t\t\t\t