What is Cash Reserve Ratio (CRR)?
5paisa Research Team
Last Updated: 05 Jul, 2024 06:10 PM IST

Content
- The Cash Reserve Ratio definition (CRR)
- How does Cash Reserve Ratio work?
- How is Cash Reserve Ratio calculated?
- Objectives of CRR
- Difference between CRR and SLR
- Why is Cash Reserve Ratio changed regularly?
Cash Reserve Ratio (CRR) is always a common topic of discussion in the Reserve Bank of India's (RBI) monetary policy. The capital a bank possesses is represented by its cash reserve. The percentage of total deposits that a bank must have in cash to operate risk-free is known as the Cash Reserve Ratio (CRR). The sum is set by the Reserve Bank of India and stored there for financial security. The bank is not permitted to utilise this money for lending or investment purposes, and the RBI does not pay interest on it. Regional rural banks, NBFCs, and scheduled commercial banks are not covered by CRR.
This article discusses the Cash Reserve Ratio meaning, how it works, and how it is calculated.
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