{"id":7663,"date":"2025-07-11T09:46:56","date_gmt":"2025-07-11T09:46:56","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/?post_type=glossary&#038;p=7663"},"modified":"2025-07-11T09:46:57","modified_gmt":"2025-07-11T09:46:57","slug":"cash-reserve-ratio-crr-2","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/cash-reserve-ratio-crr-2\/","title":{"rendered":"Cash Reserve Ratio (CRR)"},"content":{"rendered":"<p><strong><a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/cash-reserve-ratio-crr\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Cash Reserve Ratio (CRR)<\/a><\/strong> is the <strong>percentage of total deposits<\/strong> that a bank must keep <strong>in cash with the Reserve Bank of India (RBI)<\/strong>.<br>This money is kept <strong>as a safety reserve<\/strong> and <strong>cannot be used for lending or investments<\/strong>.<\/p>\n\n\n\n<p>It&#x2019;s like a &#x201C;rainy day fund&#x201D; that banks must set aside to ensure stability in the financial system.<\/p>\n\n\n\n<h2 id=\"crr-definition-in-simple-words\" class=\"wp-block-heading\"><strong>CRR Definition in Simple Words<\/strong><\/h2>\n\n\n\n<p>CRR is the portion of your deposits that the bank <strong>cannot touch<\/strong>.<br>The bank keeps this cash with the <strong>RBI<\/strong>, and it earns <strong>no interest<\/strong> on it.<\/p>\n\n\n\n<h2 id=\"why-crr-is-important\" class=\"wp-block-heading\"><strong>Why CRR is Important<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Controls <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/inflation\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">inflation<\/a><\/strong>: RBI can raise CRR to reduce the money banks can lend.<\/li>\n\n\n\n<li><strong>Ensures safety<\/strong>: Banks always have some cash in reserve.<\/li>\n\n\n\n<li><strong>Manages <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/liquidity\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">liquidity<\/a><\/strong>: Helps RBI regulate how much money flows in the economy.<\/li>\n<\/ul>\n\n\n\n<h2 id=\"crr-formula\" class=\"wp-block-heading\"><strong>CRR Formula<\/strong><\/h2>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><strong>CRR (%) = (Cash Reserve with RBI &#xF7; Net Demand and Time <a class=\"glossaryLink\" href=\"https:\/\/lemonn.co.in\/blog\/glossary\/liabilities\/\" data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]' tabindex=\"0\" role=\"link\">Liabilities<\/a>) &#xD7; 100<\/strong><\/p>\n<\/blockquote>\n\n\n\n<p><strong>Net Demand and Time Liabilities (NDTL)<\/strong> = Total deposits banks get from customers<\/p>\n\n\n\n<h3 id=\"simple-example\" class=\"wp-block-heading\"><strong>Simple Example<\/strong><\/h3>\n\n\n\n<p>Let&#x2019;s say:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>A bank has &#x20B9;1,000 crore in deposits (NDTL)<\/li>\n\n\n\n<li>The RBI has set CRR at <strong>4%<\/strong><\/li>\n<\/ul>\n\n\n\n<p>Then, the bank must keep &#x20B9;40 crore (4% of &#x20B9;1,000 crore) <strong>in cash with RBI<\/strong>.<\/p>\n\n\n\n<p>This &#x20B9;40 crore cannot be used for loans or investments.<\/p>\n\n\n\n<h2 id=\"current-crr-rate-2025\" class=\"wp-block-heading\"><strong>Current CRR Rate (2025)<\/strong><\/h2>\n\n\n\n<p>As of now, the CRR set by RBI is <strong>4.5%<\/strong> (this can change based on RBI&#x2019;s monetary policy).<\/p>\n\n\n\n<h2 id=\"quick-facts-about-crr\" class=\"wp-block-heading\"><strong>Quick Facts About CRR<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Set by <strong>Reserve Bank of India (RBI)<\/strong><\/li>\n\n\n\n<li><strong>Higher CRR<\/strong> = Less money for banks to lend<\/li>\n\n\n\n<li><strong>Lower CRR<\/strong> = More money for banks to lend<\/li>\n\n\n\n<li>CRR is one of the tools used in <strong>monetary policy<\/strong> to manage the economy<\/li>\n<\/ul>\n","protected":false},"excerpt":{"rendered":"<p>Cash Reserve Ratio (CRR) is the percentage of total deposits that a bank must keep in cash with the Reserve Bank of India (RBI).This money is kept as a safety reserve and cannot be used for lending or investments. It&#x2019;s like a &#x201C;rainy day fund&#x201D; that banks must set aside to ensure stability in the [&#x2026;]<\/p>\n","protected":false},"author":9,"featured_media":0,"menu_order":0,"template":"","meta":{"footnotes":""},"class_list":["post-7663","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7663","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/9"}],"version-history":[{"count":1,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7663\/revisions"}],"predecessor-version":[{"id":7664,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/7663\/revisions\/7664"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=7663"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}