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Cash Reserve Ratio

About Cash Reserve Ratio

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What is Cash Reserve Ratio (CRR)?

Cash Reserve Ratio

Under cash reserve ratio (CRR), the commercial banks have to hold a certain minimum amount of deposit as reserves with the central bank. The percentage of cash required to be kept in reserves as against the bank's total deposits, is called the Cash Reserve Ratio. The cash reserve is either stored in the bank’s vault or is sent to the RBI. Banks can’t lend the CRR money to corporates or individual borrowers, banks can’t use that money for investment purposes. And Banks don’t earn any interest on that money.

Why do banks have to reserve cash with RBI?

Since a part of the bank’s deposits is with the Reserve Bank of India, it ensures the security of the amount in case of any emergencies. The cash is readily available when customers want their deposits back. At the time of high inflation, the government needs to ensure that excess money is not available in the economy. CRR helps in keeping inflation under control. If there is a threat of high inflation in the economy, RBI increases the CRR, so that banks need to keep more money in reserves, effectively reducing the amount of money that is available with the banks. This curbs excess flow of money in the economy.
When there is a need to pump funds into the market, the RBI lowers the CRR rate, which in turn, helps the banks provide loans to a large number of businesses and industries for investment purposes. Lower CRR also boosts the growth rate of the economy.

Latest Updates on Cash Reserve Ratio

Comfortable liquidity reinforced transmission of rate cuts in markets

System liquidity, as measured by the net position under the liquidity adjustment facility, has been in surplus, averaging ₹3 trillion per day since the last MPC meeting

Updated On: 07 Aug 2025 | 12:36 AM IST
Bs_logoComfortable liquidity reinforced transmission of rate cuts in markets

Which consumer stocks to buy as RBI cuts repo rate, CRR, inflation eases?

Consumption stocks: With RBI cutting repo rate and CRR amid easing inflation, consumer sentiment is expected to improve. Find out which consumer stocks could benefit the most and top stocks to buy

Updated On: 11 Jun 2025 | 10:57 PM IST
Bs_logoWhich consumer stocks to buy as RBI cuts repo rate, CRR, inflation eases?

CRR at 3% seen as new normal, RBI says it's sufficient for liquidity

The cut in CRR would release primary liquidity of about Rs 2.5 lakh crore to the banking system by December 2025

Updated On: 06 Jun 2025 | 11:57 PM IST
Bs_logoCRR at 3% seen as new normal, RBI says it's sufficient for liquidity

RBI monetary policy: Repo rate cut brings early Diwali cheer for consumers

The RBI reduced the policy repo rate for a third successive time, which was widely expected

Updated On: 06 Jun 2025 | 6:59 PM IST

RBI Policy: Full of surprises, dovish on growth, neutral on further cuts

With inflation expected to rise back to above 4 per cent by Q4-FY26, the Monetary Policy Committee has capitalised upon the available headroom to frontload rate action

Updated On: 06 Jun 2025 | 12:40 PM IST

5 key takeaways from RBI MPC June meet: Rate cut, CRR, inflation and more

RBI MPC's latest decisions come amid easing inflationary pressures and continued challenges to economic growth. Here are the highlights from the central bank's June policy meet

Updated On: 06 Jun 2025 | 12:27 PM IST

RBI may use CRR as regulatory tool, repo rate cuts likely in 2025: SBI

The report predicts that the RBI could cut the repo rate by 25 basis points in its February 2025 policy meeting, with a total reduction of at least 75 basis points over the entire easing cycle

Updated On: 04 Feb 2025 | 12:37 PM IST

RBI's Rs 1.5 trillion liquidity booster raises Feb rate cut hopes

RBI announces OMOs, VRR auction, $-rupee buy-sell swap

Updated On: 27 Jan 2025 | 11:32 PM IST

Despite CRR cut, liquidity deficit in banking system crosses Rs 2 trillion

This reduction in the CRR released primary liquidity of approximately Rs 1.16 trillion into the banking system

Updated On: 01 Jan 2025 | 12:12 AM IST

Punjab & Sind Bank plans to raise Rs 3,000 cr from infra bonds this month

Asked about the timing of fundraise, he said, it would be tentatively in the third week of this month. The base issue size is going to be Rs 500 crore, with a greenshoe option of Rs 2,500 crore

Updated On: 12 Dec 2024 | 11:55 AM IST

RBI policy: CRR cut to improve lenders' margins, may lift credit growth

Deposit rates may start easing

Updated On: 06 Dec 2024 | 11:47 PM IST

RBI MPC Updates: Shaktikanta Das headlines inflation, says no room for knee-jerk reactions

RBI Monetary Policy Meeting Dec 2024 Updates: Catch all the updates here

Updated On: 06 Dec 2024 | 4:08 PM IST

RBI slashes Cash Reserve Ratio to 4%: What it means for banks and you

RBI governor Shaktikanta Das said that the CRR reduction will release Rs 1.16 trillion into the banking system, providing additional liquidity and enable banks to extend more loans

Updated On: 06 Dec 2024 | 12:02 PM IST

RBI set to announce decision on key interest rate on Dec 6 at 10 am

Experts are of the view that the central bank is likely to opt for status quo on the short-term lending rate (repo), and will possibly tinker with cash reserve ratio (CRR)

Updated On: 05 Dec 2024 | 7:35 PM IST

Share markets rise on expectations of CRR cut by RBI later this week

The NSE Nifty 50 climbed 0.32 per cent to 24,534.65 points, as of 11:02 a.m. IST, while the BSE Sensex gained 0.37 per cent to 81,145.54

Updated On: 04 Dec 2024 | 5:10 PM IST

Money in the bank: Debate over cash reserve ratio's utility grows

Indians are flocking to invest in stocks, putting pressure on banks which need to strike a balance between deposits and loans

Updated On: 06 Oct 2024 | 9:15 PM IST

SBI raises Rs 10,000 crore at a coupon of 7.36% in 15-year infra bonds

Several other state-owned lenders such as Canara Bank and Bank of India are also planning to raise funds through infrastructure bonds

Updated On: 10 Jul 2024 | 9:46 PM IST

Lenders seek better terms to increase green and sustainable financing

According to current norms, for Rs 10,000 crore of loans, banks have to ensure Rs 4,000 crore of priority sector lending target

Updated On: 14 Jun 2024 | 11:43 PM IST

Many faces of OMO

The OMO sale is quite an innovative way to address the concerns around currency

Updated On: 22 Oct 2023 | 7:05 PM IST

Banking liquidity remains in deficit after I-CRR disbursement's 2nd tranche

RBI had decided on September 8 to discontinue the I-CRR by October 7, in a phased manner

Updated On: 25 Sep 2023 | 7:39 PM IST