What is CRR

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    Cash Reserve Ratio or CRR is the minimum amount as specified by the Central Bank, to be maintained by the Commercial banks of the public deposits with the Central Bank.

    This article will upkeep you with CRR, its background, advantages and importance of Cash Reserve Ratio, Effects of CRR on Banks, depositors and interest rates and the need to maintain Cash Reserve Ratio.

    CRR is an essential monetary policy tool used for controlling the money supply in the economy, a regulation implemented in almost every nation by the Central Bank of that country.

    CRR rate is the minimum percentage of cash deposits (as specified by RBI) that must be maintained by every commercial bank as per the requirement of the Central Bank i.e. RBI.

    Cash Reserve Ratio Rate is computed as a percentage of the net demand and time liabilities of each bank. Net Demand and Time Liability is reached with the total of the savings account, current account, and fixed deposit balances.

    Answered on 2019-12-18.
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