What is CRR

or

Cash Reserve Ratio?

DeFine Glossary #14

Defined: CRR or Cash Reserve Ratio

Cash Reserve Ratio is the portion of cash deposits that a bank is required to keep with the Reserve Bank of India

To conduct business in India, all banks need to maintain a Cash Reserve Ratio.

It's a cash-only security deposit, stored at the Reserve Bank of India.

Like a rainy day fund for banks – to help them in a tough scenario ☔️

Similar to how a house owner would use the security deposit to recover any losses from your stay, the CRR serves as a safety buffer in case a bank's business fails.

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