Full Form of CRR : The full form of CRR is the Cash Reserve Ratio

What is the Full form of CRR?

No:1. The full form of CRR is the Cash Reserve Ratio.

No:2. CRR reflects the amount of money the banks of the RBI (Reserve Bank of India) have to hold with.

No:3. It is a proportion of the total cash retain by a bank.

No:4. CRR tends to change from one period to the next.

No:5. RBI decides on the CRR and banks are obligated to maintain a certain proportion of their RBI deposits.

No:6. The RBI requires banks to keep a percentage of their deposits in cash form, so when the need arises, the same can be provided to bank customers.

No:7. The CRR is known to be the proportion of cash required to be kept in reserves.

No:8. Either depositing the cash balance in the bank vault or sending it to RBI.

How is CRR calculated?

This is how CRR is to be calculate :

No:1. A bank must store 4 % of the total NDTL (Net Demand and Time Liabilities) in cash form when the current CRR rate is 4%.

No:2. The bank can  not use the funds to loan or invest.

Main objectives of the CRR

The CRR has two main objectives, which are as follows given below :

No:1. Since the portion of the bank’s deposits is with RBI, the safety of the amount is assure.

No:2. If customers want their money or deposit back, it makes it immediately available.

No:3. CRR helps to manage costs under the track.

No:4. RBI is rising the CRR at a time of high economic inflation, so banks need to keep more money in reserves and they’ll have very little liquidity to start lending.


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