{"id":75551,"date":"2025-11-29T16:43:10","date_gmt":"2025-11-29T11:13:10","guid":{"rendered":"https:\/\/vajiramandravi.com\/current-affairs\/?p=75551"},"modified":"2025-11-29T16:43:10","modified_gmt":"2025-11-29T11:13:10","slug":"cash-reserve-ratio","status":"publish","type":"post","link":"https:\/\/vajiramandravi.com\/current-affairs\/cash-reserve-ratio\/","title":{"rendered":"Cash Reserve Ratio (CRR), Objectives, Impact, CRR vs SLR"},"content":{"rendered":"

Cash Reserve Ratio (CRR) is the share of a bank\u2019s total deposit that it keeps with the Reserve Bank of India (RBI) in the form of cash only. However, the RBI doesn\u2019t provide any interest on the CRR, and the banks cannot use this amount for lending or investment purposes.<\/span><\/p>\n

Statutory Liquidity Ratio (SLR) is the percentage of deposits that the banks have to keep with themselves in the form of liquid cash, gold deposit, or government securities. This SLR is used to control inflation and increasing SLR reduces the money supply, which helps in controlling inflation.<\/span><\/p>\n

What is Cash Reserve Ratio?<\/b><\/h2>\n

The Cash Reserve Ratio (CRR) is a monetary policy tool of the Reserve Bank of India<\/strong><\/a> (RBI) in which banks are required to keep a percentage of their total deposit with the central bank, i.e., RBI. This reserve is used to control the money supply, manage inflation, and to make sure that banks have enough funds to meet the withdrawal demands.<\/span><\/p>\n

The banks cannot use these amounts for any other purposes, such as lending and investment purposes.\u00a0<\/span><\/p>\n

The Cash Reserve Ratio (CRR) applies only to commercial banks and regional rural banks, and Non-Banking Financial Companies (NBFC) are excluded.<\/span><\/p>\n

The RBI Act 1949, Section 42, gave a provision for the RBI to announce a Cash Reserve Ratio (CRR) between 3%-15%. This was amended in 2007 by removing the lower ceiling making it 0-15%.<\/span><\/p>\n

Cash Reserve Ratio Objectives<\/b><\/h2>\n