Cash Reserve Ratio

Cash Reserve Ratio (CRR) is the minimum percentage of a commercial bank’s net demand and time liabilities (NDTL) that it must keep as cash with the central bank (like the Reserve Bank of India) or as deposits with it. This requirement ensures banks maintain enough liquidity to meet customer withdrawals and stabilize the banking system. By adjusting CRR, central banks influence the amount of money banks can lend, affecting economic activity and inflation. Essentially, CRR helps regulate the money supply and maintain financial stability.