Cash Reserve Ratio (CRR)
The share of deposits banks must keep with the RBI in cash.
Definition
The Cash Reserve Ratio (CRR) is the percentage of a bank's total deposits that it must hold in reserve with the RBI as cash, earning no interest. Raising the CRR reduces how much banks can lend, tightening liquidity.
Example
If CRR is 4.5%, a bank must keep ₹4.50 with the RBI for every ₹100 of deposits, leaving the rest available to lend.
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