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translateGLOSSARY · BANKING

What is Cash Reserve Ratio (CRR)?

CRR is the percentage of a bank's deposits it must hold as cash reserves with the RBI, earning no interest.

PrepClever Glossary · Banking

updateUpdated July 2026

Formula

Required Reserves = CRR% × Net Demand & Time Liabilities (NDTL)

The Cash Reserve Ratio is a monetary tool: raising CRR locks up more of banks' funds with the RBI, reducing money available for lending and tightening liquidity; lowering it frees up funds. Unlike SLR, CRR must be held in cash and earns no return.

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Example

At a 4.5% CRR, a bank with ₹1,000 crore of deposits must keep ₹45 crore in cash with the RBI.

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Relevant NISM series

IBPS PORBI Grade BJAIIB

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Glossary

FAQs about Cash Reserve Ratio (CRR)

What is the difference between CRR and SLR?add

CRR must be held as cash with the RBI and earns no interest; SLR can be held in cash, gold or approved securities (like G-Secs) and can earn a return.

Where to go from here

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What is Cash Reserve Ratio (CRR)?

Related Terms

Statutory Liquidity Ratio (SLR)

Repo Rate

Liquidity Coverage Ratio (LCR)

FAQs about Cash Reserve Ratio (CRR)

Where to go from here

Master every term that matters

What is Cash Reserve Ratio (CRR)?

Related Terms

Statutory Liquidity Ratio (SLR)

Repo Rate

Liquidity Coverage Ratio (LCR)

FAQs about Cash Reserve Ratio (CRR)

Where to go from here

Master every term that matters