What is the Full form of CRR? About CRR

 

CRR Full FormCash Reserve Ratio or CRR is an important monetary policy tool. It is the minimum amount of money which commercial banks of public deposits have to maintain in the Central Bank. CRR Rule is provided to each bank in almost all countries. In India, it is calculated by RBI or Reserve Bank of India, as it happens to be the Central Bank of India. It is used for regulating money in the economy. It is used to maintain the overall liquidity of the economy. CRR helps in improving the liquidity of the economy when the market rates go down. It eases the financial environment when there would be a surplus rupee situation in the country. The chief goal of Cash Reserve Ratio is to ensure that a small amount of funds is always available along with the deposits. Increased CRR means that there is low lending capacity for the banks and the same is true for vice-versa.


 

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