Lender of last resort function of Central Bank implies that the Central Bank is under the obligation to provide funds against securities to the commercial bank as and when needed by them. When a commercial bank faces financial crisis and fails to obtain funds from other sources, then central bank provides them the financial assistance in the form of credit. This role of the central bank saves the commercial banks from being bankrupt. Thus, the central bank plays the role of a guarantor for the commercial banks and maintains a sound and healthy banking system in the economy.