What is CRR
or
Cash Reserve Ratio?
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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
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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.
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Like a rainy day fund for banks – to help them in a tough scenario ☔️
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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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