{"id":20572,"date":"2024-02-17T12:12:30","date_gmt":"2024-02-17T06:42:30","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=20572"},"modified":"2025-04-06T02:12:53","modified_gmt":"2025-04-05T20:42:53","slug":"crr","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/crr\/","title":{"rendered":"What is Cash Reserve Ratio (CRR)?"},"content":{"rendered":"<h2>About Cash Reserve Ratio (CRR)<\/h2>\n<ul>\n<li>Under CRR, commercial banks have to hold a certain minimum amount of deposit as reserves with the RBI.<\/li>\n<li>The\u00a0percentage of cash\u00a0required to be kept in reserves as\u00a0against the bank&#8217;s total deposits\u00a0is called the CRR.<\/li>\n<li>The\u00a0RBI decides the amount, and is\u00a0kept with them for financial security.\u00a0<\/li>\n<li>The\u00a0bank cannot use this amount\u00a0for lending and investment purposes and\u00a0does not get any interest from the RBI.\u00a0<\/li>\n<li>The CRR\u00a0applies to scheduled commercial banks, while\u00a0regional rural banks and NBFCs are excluded.<\/li>\n<li>Following are the\u00a0critical objectives of the CRR:\n<ul>\n<li>CRR helps\u00a0control inflation.\u00a0In a high inflation environment, the\u00a0RBI can increase CRR to prevent banks from lending more.<\/li>\n<li>CRR also\u00a0ensures banks have a minimum amount of\u00a0funds readily available to customers, even\u00a0during huge demand.<\/li>\n<li>CRR serves as the\u00a0reference rate for loans. Also known as the base rate for loans, banks cannot offer loans below this rate.<\/li>\n<li>Since CRR\u00a0regulates the money supply,\u00a0it boosts the economy whenever required by lowering the CRR.<\/li>\n<\/ul>\n<\/li>\n<li>How is the CRR Calculated?\n<ul>\n<li>There is\u00a0no CRR formula. In technical terms, CRR is\u00a0calculated as a percentage of Net Demand and Time Liabilities (NDTL).<\/li>\n<li>NDTL for banking refers to the aggregate savings account, current account, and fixed deposit balances held by a bank.<\/li>\n<li>In case a bank fails to maintain its CRR, it will\u00a0have to pay fines to the RBI because of that default. The fine is\u00a0charged for the shortfall.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n<hr \/>\n<h3>Q1) What are Green Deposits?<\/h3>\n<p>In general terms, a green deposit is a fixed-term deposit for those who want to invest in environmentally friendly projects. Just like a regular Fixed Deposit scheme, the green deposit pays interest to its investors and has a fixed term. The proceeds that a bank gets from deposit holders get earmarked for allocation to green finance.<\/p>\n<p><strong>Source:<\/strong> <a href=\"https:\/\/www.business-standard.com\/economy\/news\/sbi-seeks-crr-reduction-on-green-deposits-says-chairman-dinesh-khara-124021600919_1.html\" target=\"_blank\" rel=\"nofollow noopener\"><u>SBI seeking lower CRR on green deposits, says chairman Dinesh Khara<\/u><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The percentage of cash required to be kept in reserves as against the bank&#8217;s total deposits is called the CRR.<\/p>\n","protected":false},"author":5,"featured_media":20573,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1],"tags":[],"class_list":{"0":"post-20572","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-upsc-prelims-current-affairs","8":"no-featured-image-padding"},"acf":[],"_links":{"self":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/20572","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/comments?post=20572"}],"version-history":[{"count":0,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/posts\/20572\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media\/20573"}],"wp:attachment":[{"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/media?parent=20572"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/categories?post=20572"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/vajiramandravi.com\/current-affairs\/wp-json\/wp\/v2\/tags?post=20572"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}