What is the meaning of CRR?

Question

Accepted Answer

CRR stands for Cash Reserve Ratio, which is the percentage of deposits that banks have to keep with the central bank.

CRR is a monetary policy tool used by the central bank to control inflation and liquidity in the economy.
Currently, the CRR in India is 4%.
If the central bank increases the CRR, banks will have to keep more money with them, which reduces the amount of money available for lending and can lead to a decrease in inflation.
On the other hand, if the central bank decreases the CRR, banks will have more money to lend, which can lead to an increase in inflation.
CRR is different from SLR (Statutory Liquidity Ratio), which is the percentage of deposits that banks have to maintain in the form of liquid assets like government securities.
CRR is also different from the repo rate, which is the rate at which the central bank lends money to commercial banks.

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