What is Cash Reserve Ratio?

CRR (Cash Reserve Ratio) is a tool for maximisingthe liquidity in banks to check economic crisis like recession, depreciating value of money etc. Cash reserve ratio implies a kind of bank and government scheme used for holding a part of deposits or cash to be kept within bank. Thus it also acts as saving mechanism wherein a portion of money is kept safely and which helps in maintaining equilibrium between money deposited and money withdrawn. The reserve ratio is set by the central bank each country.

 

 

 

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