What is cash reserve ratio (CRR)?
The proportion of deposits which banks need to keep with Reserve Bank of India as cash. It has been used for liquidity management and indicates the policy stance of the central bank.
What purpose does it serve?
RBI uses CRR either to drain excess liquidity or to release funds needed for the growth of the economy from time to time. It also ensures that banks have sufficient cash to cover customer withdrawals.(Click on graphic)
